Savings and spending accounts

What you need to know

Health savings and flexible spending accounts allow you to set aside pretax money to help pay for eligible health care expenses. Find out more about your savings and spending account options in this section.

An overview of your options

The Health Savings Account (HSA)

  • An HSA is offered only with the HSA Primary and HSA Plus plans.
  • You can use your HSA funds to pay for eligible medical, dental, and vision expenses now, or save and invest for those expenses in the future, even in retirement.
  • HSA funds are only available as the funds are deposited into your account.
  • There's no use-it-or-lose-it rule for the HSA, like there is for FSAs.

Are you eligible to contribute to an HSA?

It’s easier to think about who is NOT eligible to contribute.

  • Will you be covered by Medicare or TRICARE?
  • Will you be covered by another non-high-deductible plan (that is, a plan with a deductible less than $1,400 for individuals and $2,800 for families, based on 2022 limits)?
  • Will you receive reimbursements for medical expenses from someone else’s general purpose Flexible Spending Account?
  • Will you be claimed as a dependent on someone else’s tax return?

If you answer “yes” to any of these questions regarding next year, you will not be eligible to contribute to an HSA through a BAE Systems medical plan.

The Health Care Flexible Spending Account (FSA)

  • You can enroll in a Health Care FSA if you are enrolled in the I&S Copay plan.
  • You can use your Health Care FSA to pay for eligible medical, dental, and vision expenses during a calendar year.
  • You have full access to your FSA contributions on January 1 of the plan year.
  • Eligible costs must be incurred by year end, or the funds are forfeited.
  • A special note: If you are enrolled in one of the HSA plans and are not eligible to contribute to an HSA, you can enroll in a Health Care FSA.

A Limited Purpose Flexible Spending Account (FSA)

  • You can contribute to a Limited Purpose FSA if you are enrolled in the HSA Primary or HSA Plus plan.
  • You can only use a Limited Purpose FSA to help you pay for eligible dental and vision expenses only.
  • Consider using a Limited Purpose FSA in conjunction with an HSA if you wish to preserve your HSA funds for medical expenses or as a savings account for health care expenses during retirement.
  • You have full access to your Limited Purpose FSA contributions on January 1 of the plan year.
  • Eligible dental or vision costs must be incurred by year end, or the funds are forfeited.

Looking for more details on your health care savings and spending account options?

View a comparison chart to see how the HSA, Health Care FSA, Limited Purpose FSA, and Dependent Care FSA compare.

View the chart

Make the most of an HSA

A Health Savings Account (HSA) is available with the HSA Primary and HSA Plus options, which are high-deductible health plans (HDHPs). However, don’t let the words “high deductible” intimidate you. While HSA plans have higher deductibles and out-of-pocket limits, they may result in lower total costs for you. Remember, preventive care services are covered 100% by all our plans.

HSA contributions

If you enrolled in the HSA Primary or HSA Plus options, you can contribute to your account pretax* up to annual IRS limits. If you are or will be age 55 during the year, you can contribute an additional $1,000.

  Individual coverage Family coverage
Your 2022 maximum contribution (based on annual IRS maximums) Under age 55: $3,650

Age 55+: $4,650
Under age 55: $7,300

Age 55+: $8,300

HSA contributions and earnings are not subject to federal taxes; however, a few states treat the contributions as taxable income. Those employees residing in California and New Jersey will have applicable state taxes withheld from their contributions each pay period.

Note: If you are married and your spouse is also enrolled in an HSA, your combined HSA contributions may not exceed IRS limits.

Four ways you can benefit from an HSA

  1. It’s a tax-savings trifecta! With an HSA, you save on taxes three ways:
    • The money you contribute to your HSA is made on a pretax basis, before federal and state1 taxes are calculated. For 2022, the maximum amount you can contribute to your HSA according to IRS limits is $3,650 for individual coverage or $7,300 for family coverage. Keep in mind that you can change your HSA contribution amounts throughout the year as long as you don’t exceed the annual limits.
    • Your account can grow tax-free.
    • You don’t pay taxes on the money you take out to pay for qualified health care expenses.
  2. Your HSA belongs to you – always. Your account balance is yours to keep and use. It remains yours even if you leave BAE Systems, and there’s no use-it-or-lose-it rule like the one with FSAs. As a result, you can use the HSA to save for future health expenses, including those in retirement.
  3. Catch up on savings! If you are age 55 or older, you can save even more in your HSA. The IRS allows you to contribute an additional $1,000 to your account in 2022.
  4. Once your account balance reaches $1,000, you can invest your money in a variety of investment options to help your savings grow.

1 In California and New Jersey, HSA contributions are subject to state tax.

No change to IRS Flexible Spending Account (FSA) contribution limits

Contribute up to $2,750 in 2022 – the same as the 2021 limit. Plan carefully, as this is a use-it-or-lose-it account, and restrictions may apply depending on your medical plan. You must spend your FSA dollars by December 31, 2022, and you will have until April 30, 2023, to submit your 2022 claims for reimbursement.

Carefully consider the care you and your family will need next year. If it makes sense for you, contribute up to $5,000 to your Dependent Care FSA ($2,500 if your spouse or domestic partner contributes to one as well).

Last call for wellness incentives

Because of significantly reduced usage of the Wellness Incentive Program in recent years, this program will end on December 31, 2021. If you’ve been planning to earn wellness incentives in 2021, take action as soon as possible, because the program will begin to transition in November.

While you may continue to earn 2021 wellness incentives through the end of the year, only incentives submitted and processed by Cigna through November 30, 2021, can be deposited in the standard way to your Health Savings Account (HSA). Some incentives take more time to earn and process than others, so the earlier you complete and submit your wellness incentives the better.

Any incentives earned or processed by Cigna in December will be paid directly to you through payroll and be reduced by applicable taxes. These payroll payouts will be made in March 2022, as long as you are still a BAE Systems employee.

Look for more details to come from Cigna.

« Back to What’s Changing in 2022