I'm walking through my open enrollment documents and there's this part that surprises me...
Is the annual amount of the contribution available on the first day of coverage?
HSA: No. Only the amount currently available in the HSA may be used to pay or reimburse qualified expenses.
I had phoned my dentist this morning to get an estimate for some treatment I wanted to begin to sock away money for so I could make the payment at the end of the year and get my
FSA contributions lined up today. I was under the impression that I had to wait for the payroll contributions to accrue to get to the balance needed to cover the treatment expense. This would match my experience with HSA's where it's my own private account and I can only debit from it what the current balance is much like a regular checking account.
However, this FSA account seems like an entirely different animal. It seems to me like an FSA is an account that can hold a negative balance in the account that I'm expecting cannot exceed my yearly contributions. How is all this managed and regulated exactly? I see biweekly withdrawals out of payroll, where does the money come from if I spend the total yearly amount in the first month of coverage using the assigned
Health Care Spending Card.