Wilson Sonsini offers a variety of tax advantaged savings and spending accounts:
Health Savings Account (HSA)
If you elect the Cigna Choice Fund HDHP as your medical plan and have an open HSA, the firm will make a contribution to your account. The amount depends on your coverage category:
You must be an eligible participant with HDHP coverage effective as of the first calendar day of the month in order to qualify for that month’s contribution. For example, if your HDHP coverage is effective on September 19, you will qualify for employer contributions for the months of October through December.
You can’t contribute to or receive employer contributions to an HSA once you become enrolled in Medicare. However, you can spend the money, tax-free, for healthcare at any age.
To make the maximum contribution in a calendar year, you must:
Meet all requirements to be eligible for HSA contributions on January 1; and
Remain qualified through December 1.
If you are enrolled in the HDHP for part of the year, please refer to IRS Publication 969 and consult your tax advisor for the applicable maximum allowable contribution based on the length of your continued HSA eligibility.
The triple tax advantage
When you deposit money into an HSA, you won’t have to pay income tax* on:
Deposits you make to your HSA;
Money you take out of your HSA to pay for qualified health expenses; and
Interest earned from the HSA.
That’s why it’s called a “triple tax advantage.”
You will pay income tax and an early distribution penalty of 20% for spending your HSA savings on anything other than healthcare before you reach age 65. Please consult your tax professional for details.
At the end of the year, the bank will report your HSA contributions and withdrawals to the IRS. Please remember to obtain the year-end tax statements on the banking portal that is linked to www.myCigna.com, so that you report these amounts when you file your tax return.
*There are currently three states that require you to pay state income tax on the HSA: Alabama, California, and New Jersey.
Flexible Spending Accounts
Flexible Spending Accounts allow you to set aside money from your paycheck on a pre-tax basis, and use the funds to reimburse yourself for qualified expenses tax-free. When you contribute to an FSA, the money is not taxed when it comes out of your paycheck or when you get it back as a reimbursement.
There are two types of FSAs:
Dependent Care FSA
Health Care FSA
Use pre-tax dollars to pay for eligible health expenses, including:
Medical, dental, and vision copays and coinsurance;
Healthcare products, such as cough drops and bandages; and
Glasses, contacts, and LASIK surgery.
Eligibility for the Health Care FSA is limited to employees who are not eligible for a Health Savings Account, such as those who enroll in Kaiser HMO or waive medical coverage.
Dependent Care FSA
Use pre-tax dollars to pay for eligible dependent care services that allow you and your spouse to go to work, such as day care for children through age twelve.
Eligible employees may elect to set aside a certain amount of money in the Dependent Care FSA, based on the guidelines below:
Your annual election will be deducted from your paycheck in installments throughout 2023. Your election will remain in effect all year, unless you have a qualifying life event that warrants an FSA change. You’ll use the money in your FSA to pay yourself back for eligible expenses incurred during the plan year. Any leftover amounts remaining in your account after the claim-filing deadline are forfeited and cannot be carried forward, so plan carefully. The maximum contribution for married couples filing jointly is $5,000 and $2,500 for married individuals filing separately.
Use it by December 31, or lose it!
You must use the money in your FSA for eligible expenses incurred through December 31, 2023, and you must submit your claims by March 31, 2024. Leftover money cannot be rolled over to the next plan year. Take some time to determine how much you spent on out-of-pocket healthcare or dependent care expenses over the last year.
PayFlex debit card
When you enroll in the Health Care FSA, PayFlex will send you a debit card that can be used to pay for eligible expenses. This card provides a convenient option for paying your providers who accept MasterCard. You still MUST keep all of your receipts for your records, and be prepared to submit them to PayFlex if requested. Using the debit card is optional.
Claim reimbursements can be direct-deposited into your bank account by completing the PayFlex Reimbursement form. However, keep in mind that when you choose to use the debit card to pay your providers, there are no reimbursements required.