From sports injuries to chronic conditions, physical therapy is a common and important treatment for many medical issues. However, frequent physical therapy can become quite costly over time. Using a Health Savings Account (HSA) or Flexible Spending Account (FSA) allows you to pay for therapy with pre-tax dollars and provides significant savings.
What Physical Therapy Costs Are Eligible?
The first thing to understand is what types of physical therapy expenses can be covered through an HSA or FSA. In general, any physical therapy service that is prescribed by a physician for a specific medical condition will qualify. This includes the initial evaluation, ongoing therapy sessions, use of equipment like resistance bands during your appointments, and more. Items like gym memberships or massages that are not part of a doctor-prescribed treatment plan would not be eligible.
Over-the-counter medications and supplies can be covered with these accounts. When in doubt, save your detailed receipts and have your provider write a letter confirming the therapy is medically necessary for treating your health condition. This will help document that the expenses qualify for payment from the HSA or FSA.
HSA Eligibility and Advantages
To contribute to a Health Savings Account and use it for physical therapy costs, you must be enrolled in a qualifying High Deductible Health Plan (HDHP). For 2023, that means a health insurance plan with a minimum deductible of $1,500 for individual coverage or $3,000 for family coverage. There are several key advantages to using HSA funds for your therapy expenses:
- Contributions to your HSA account are made pre-tax, reducing your taxable income. The money grows tax-free within the account as well. Then when you withdraw funds to pay for physical therapy, you do so tax-free. This “triple tax advantage” allows significant savings.
- You own the HSA account and can take it with you if you change health plans or employers. The funds rollover year-to-year if unspent.
- Once you turn 65, withdrawals can be taken for any purpose without penalty, just subject to ordinary income tax.
Key Aspects of Using an FSA
A Flexible Spending Account, or FSA, also lets you pay for healthcare costs like physical therapy with pre-tax dollars. With an FSA, you elect how much to set aside each year, up to $3,050 in 2023. This amount is deducted evenly from your paychecks.
The key trade-off compared to an HSA is that FSA funds typically must be spent by the end of the plan year or they are forfeited back to the employer. Though some plans may allow carrying over up to $610 to the next year or have a grace period for using the funds. You also generally cannot change your FSA contribution amount during the year once you have enrolled.
If you leave your employer, any remaining FSA funds may be forfeited. And over-the-counter medications do not qualify for FSA reimbursement. On the plus side, having a set aside source of funds just for physical therapy can be beneficial if the costs are predictable.
Strategies to Maximize Savings
Here are some strategies to make the most of HSA and FSA accounts for your physical therapy expenses:
- Consider your expected physical therapy costs for the year and divide how much to allocate to each account accordingly based on the annual limits.
- If your employer offers an HSA along with a limited purpose FSA, use the FSA only for dental and vision costs. This preserves the HSA funds just for therapy.
- Schedule regular recurring appointments at the start of the HSA or FSA year to maximize coverage.
- Try to bunch physical therapy costs toward the beginning or middle of the FSA year. Then submit claims promptly to take advantage before time runs out.
- You can use both HSA and FSA funds in the same year if needed, just not on the exact same claim.
- Save detailed physical therapy bills, EOBs, and prescription records in case you need to provide verification of expenses later.
- For optimal savings, use the tax-free HSA funds for ongoing expenses like maintenance therapy sessions. Use the “use it or lose it” FSA for one-off physical therapy costs.
Leveraging an HSA or FSA account can yield significant savings on your therapy expenses each year. Be sure to coordinate with your tax advisor for help optimizing how you utilize these accounts. Proper planning can reduce your out-of-pocket costs and help you adhere to therapy prescribed by your doctor.
Get Started Today
Unlock the path to pain-free living with Innovative Healthcare Centers! Did you know you can leverage the power of Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) to invest in your well-being? Take charge of your physical health by utilizing your HSA or FSA for transformative physical therapy sessions at Innovative Healthcare Centers. Our expert team is dedicated to personalized care, utilizing cutting-edge techniques to accelerate your recovery. Click here to schedule an appointment!