NorthWestern Energy offers both an HSA and an FSA that allow employees to contribute pre-tax dollars that can be used to pay for qualified health care and dependent care expenses. The HSA can also serve as a valuable retirement savings tool.
Health Savings Account
A Health Savings Account, or HSA, is a benefit that allows you to choose how much of your paycheck you want to contribute to the account, before taxes are taken out, to pay for qualified healthcare expenses or to use as a retirement savings tool. The HSA’s unique, triple-tax savings means the money you contribute, any earnings from investments, and withdrawals for eligible expenses are all tax-free, making it a powerful savings and retirement tool! In order to be eligible for an HSA you must be enrolled in the HSA Qualified plan.
The maximum amount that can be contributed to your HSA is established by the IRS each year. The limits in 2024 are $4,150 for single coverage and $8,300 for two-party or family coverage. If you are age 55 or older, you can contribute an additional $1,000. NorthWestern Energy helps you build your HSA by contributing to the account. The company's annual contribution is up to $750 for single coverage and up to $1,500 for two-party or family coverage. Plus, you can earn an additional company contribution to your account of up to $1,000 for completing activities under the company's wellbeing program.
Think of your HSA as a personal savings account. Money you don't spend rolls over from year to year. So, if you leave the company, change jobs, switch to another medical plan or even retire, your HSA and the money in it is still yours to keep. You can grow your HSA by investing the funds in the account to save for healthcare costs in retirement, which are estimated to total $315,000 for a couple retiring in 2023.
Flexible Spending Account
A flexible spending account, or FSA, is a benefit that allows you to choose how much of your paycheck, before taxes are taken out, you want to contribute to the account to pay for qualified healthcare or dependent care expenses. This saves you money by reducing your taxable income. A FSA is employer-owned, meaning that, you forfeit any unused monies in the account at the end of the grace period for the plan year, or March 15 of the following year. On the other hand, a HSA is employee-owned, meaning that the account and the monies in it are yours, and you can take all money in the account with you even if you leave the company.
The maximum amount that can be contributed to a FSA is established by NorthWestern Energy and cannot exceed the IRS maximum for the year. The limits for 2024 are $3,050 for a healthcare FSA and $5,000 for a dependent care FSA. NorthWestern Energy does not contribute to your FSA. One benefit to a healthcare FSA is that all of your FSA funds are available to spend right away – on January 1. With a dependent care FSA, the monies have to be in the account before you can spend them.
NorthWestern Energy does not offer a limited purpose FSA. Also, you cannot have a healthcare FSA and a HSA, but you can have a dependent care FSA and a HSA.
Dependent Care FSA FAQs
Learn the answers to frequently asked questions about Dependent Care FSAs.
HSA vs FSA
There are some key differences between a HSA and a FSA that are described in the video and in the document links. One important difference is that NorthWestern Energy does not contribute to a FSA. It's important to understand and consider the differences when you make your medical plan election.
The Right Savings Plan for You
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are great ways to save for health expenses by making tax-free contributions and distributions. Find out which option is best for you.
HSA vs FSA
Save money by paying for health care with an HSA or health FSA, not your checking account. Learn how the two compare.
Have benefit questions?
Email: benefits@northwestern.com
Phone: 888-236-6656
Phone: 888-236-6656