Duke faculty and staff who are not enrolled in Duke Advantage can protect up to $3,400 of their salary from taxes by signing up for a Health Care Flexible Spending Account (HCFSA) during open enrollment. This account allows you to set aside money to pay for eligible health expenses such as copays, deductibles, and medical supplies. You will be provided with a HealthEquity health care card you can use to draw money from the account at the point of sale. The health care card can only be used for eligible expenses incurred during the current plan year.
Money set aside in a HCFSA is not subject to federal, state or Social Security taxes. That means a flexible spending account may save you an average of $30 on every $100 you spend on eligible expenses. The maximum allowable contribution for a HCFSA is $3,400 (subject to IRS regulations).
Up to $680 of your unused 2027 HCFSA balance can be carried over to the 2028 plan year. Any amount above $680 remaining in your account after December 31, 2027, will be forfeited unless Pay Me Back claims are submitted by April 15, 2028, for eligible expenses incurred January 1 – December 31, 2027. The health care card cannot be used in 2027 for 2026 expenses.
Can a Health Care Flexible Spending Account (HCFSA) save me money?
If your answer to any of the following questions is “yes,” then you should consider participating in a HCFSA.
- Do you expect to have medical, dental, or vision expenses that are not covered by your insurance plans, such deductibles, copays, coinsurance, or amounts in excess of usual and customary (U&C) limits?
- Did you know Personal Protective Equipment (PPE) and over-the-counter medications are considered eligible health care expenses? For a list of eligible/ineligible expenses, please review Eligible & Ineligible Expenses.
- Do you plan to buy new eyeglasses or contacts, have your hearing tested, or expect to have orthodontia expenses that exceed what is covered by insurance?
If you have questions about flexible spending account orthodontia expense guidelines, please call HealthEquity at (877) 924-3967 or visit Orthodontia Benefits for more information.
How much can I contribute to a Healthcare Flexible Spending Account?
The maximum contribution you can make to your HCFSA in 2027 is $3,400 (subject to IRS regulations). The minimum contribution is $130. Your contributions will be deducted pre-tax from your pay. If you or your spouse are enrolled in a Health Savings Account (HSA), you are not eligible to participate in a Health Care Flexible Spending Account (HCFSA).
Whose health care expenses can I pay for?
Any dependent you claim on your federal income tax return is a dependent under the Health Care Flexible Spending Account. Expenses for unmarried partners are not eligible for reimbursement, according to federal tax law, unless he/she meets federal dependent eligibility criteria.
What is an HSA-eligible health plan?
Duke Advantage is Duke’s High Deductible Health Plan that is paired with a Health Savings Account (HSA). An HSA-eligible high deductible health plan (HDHP) satisfies certain IRS requirements with respect to deductibles and out-of-pocket expenses. You must elect coverage in the Duke Advantage HDHP to be eligible to open and contribute to the Duke HSA.
What is an HSA?
An HSA is an individual account used in conjunction with an HSA-eligible health plan to cover out-of-pocket qualified medical expenses on a tax-advantaged basis. Your HSA belongs entirely to you, which means it is yours to keep even if you change employers. HSAs can be used to pay for both current and future qualified medical expenses for you and your eligible dependents. You can contribute to your account, withdraw money to pay for qualified medical expenses, and potentially grow your account on a tax-free basis by investing your savings in a wide array of investment options.
Am I eligible to open an HSA?
You must meet several IRS eligibility requirements to establish and contribute to an HSA. It is your responsibility to determine if you are eligible:
- You must be enrolled in an HSA-eligible health plan on the first day of the month. For example, if your coverage is effective on May 15, you are not eligible to contribute to or take a distribution from your HSA until June 1.
- You cannot be covered by another health plan that is not an HSA-eligible health plan.
- You cannot currently be enrolled in Medicare. A 6-month look-back rule may apply for Medicare enrollment. Therefore, HSA contributions should end 6 months before enrollment in Medicare.
- You cannot be claimed as a dependent on another person’s tax return.
- Additionally, in order to open and contribute to an HSA, you must have a valid U.S. address.
If you open an HSA and do not meet the above criteria, your contributions, any investment earnings, and distributions may be subject to income taxes, penalties, and/or excise taxes.
How much can I contribute to an HSA?
For 2027, the IRS maximum HSA contribution limits are $4,500 for Individual coverage and $9,000 for all other coverage tiers. Individuals who are age 55 or older may contribute an additional $1,000 catch-up contribution. Duke will contribute $200 for employees enrolled in Individual coverage under the Duke HSA Plan and $500 for employees enrolled in all other coverage tiers annually.
What type of expenses does an HSA cover?
Distributions from an HSA used to pay for qualified medical expenses for you, your spouse, and dependents are tax-free provided they meet the IRS definition of a qualified medical expense. Examples of expenses that qualify for payment or reimbursement include:
- Health plan deductibles and coinsurance,
- Most medical care and services,
- Dental and vision care,
- Prescription drugs, over-the-counter medications, and insulin,
- Medicare premiums (if age 65 or older).
- Note that these expenses must not already be covered by insurance and non-Medicare health insurance premiums generally do not qualify. Additional information about HSAs and qualified medical expenses can be found in IRS Publications 969 and 502 at www.irs.gov.
If I don’t use my HSA for current medical expenses, can I save it for the future?
One of the main benefits of an HSA is the flexibility to use it when you need it. You can use your HSA to save and grow your money tax-free for the future, or you can use it to save money on taxes while paying for qualified medical expenses today. The combination of HSA tax advantages and the breadth of investment options available through an HSA provides an opportunity for potential growth.
