2026 Tax-advantaged Spending Accounts

You have tax-advantaged spending accounts available to you and administered by Optum Financial. You will receive a debit card that allows you convenient access to your accounts at any time.

• If you enroll in the PPO Plan, you’ll automatically receive the HRA.
• If you enroll in CDHP, you’ll automatically receive an HSA as long as you have a SSN. You may also need to verify identification.
• Flexible Spending Accounts are available whether you enroll in medical coverage.
• The Dependent Care FSA is available if you have qualifying dependents who receive care while you are working.

Tax-advantaged spending account options are:

Health Savings Account (HSA)

The HSA is available if you enroll in the CDHP. You will receive a card for the HSA if you don’t already have a card from Optum. For 2026, UofL will contribute a set amount based on the coverage level you chose. Note: If you enroll in the CDHP medical plan with HSA, once you enroll in any part of Medicare, you are no longer eligible to contribute to an HSA or receive the employer contribution. Please reach out to Benefits@Louisville.edu if you are not eligible for the HSA.

HSA Beneficiary Designation                                                                                                                                                                                 

If you have a Health Savings Account (HSA), it’s important to designate a beneficiary. You can do this through the Optum portal or the Optum Financial Mobile App.

• Login | Health Account Benefits Portal: Once logged in, from the home page, select “I want to manage beneficiaries”
• Optum Financial Mobile App: Once logged in, select settings and manage beneficiaries.

If you are married and your spouse is listed as your beneficiary, they will become the owner of the account and assume it as their own. If you are unmarried, your account will cease to be an HSA. The money in your account will pass to your beneficiaries or become a part of your estate, and it will be subject to applicable taxes.

Here’s how it works:

Health Reimbursement Account (HRA)

The HRA is available if you enroll in the PPO Plan. UofL contributes a set amount (based on coverage tier) to the HRA. Once you enroll in the PPO Plan, you will receive a debit card through Optum Financial that is tied to your account. You may use this debit card to cover eligible medical and prescription expenses. If you don’t use all your HRA dollars on eligible medical or prescription expenses, the remaining balance rolls over to the next plan year (up to allowed maximum) if you stay enrolled in the PPO Plan. You can never have more than two times your annual allowance in the HRA. If you already have an Optum card, your HSA funds will loadedonto to that card on January 1, 2026.

Flexible Spending Accounts (FSAs)

With FSAs, you can set aside pre-tax dollars (up to IRS limits) to pay for eligible expenses. FSAs have a “use-it-or-lose-it” provision, meaning any unspent money will be forfeited. Employees have until March 31, 2027, to submit any claims incurred on or before December 31, 2026.

UofL FSA options are:

• Health Care FSA (available if you are in the PPO or ULH plans or if you waive medical coverage)
• Limited Purpose FSA (only available if you are in the CDHP)
• Dependent Care FSA (available if you are enrolled in any medical plan or if you waive medical coverage)

Health Care FSA

Annual paycheck deductions for the Health Care FSA can be $150 to $3,300 per calendar year. The total annual contribution is available on your benefits start date. Eligible expenses including medical, dental, vision and prescription drug are reimbursable through the plan. You can find a comprehensive list of eligible expenses at optumfinancial.com.

For 2026, Health Care FSAs have a rollover provision which allows up $660 (must have a balance of greater or equal to $50 for rollover) of unspent funds to roll into the next calendar year.

Limited Purpose FSA

This account is available if you enroll in the CDHP medical plan and you qualify to contribute to an HSA. It lets you set aside money each pay period and reimburse yourself tax-free for eligible dental or vision expenses only. For eligible medical and prescription drug expenses, you can use your HSA.

The Limited Purpose FSA could be of interest to you if you are contributing to the limit in the HSA and want to maximize your tax savings even more. You can contribute $3,300 toward the Limited Purpose FSA in 2026.

Dependent Care FSA 

Annual employee paycheck deductions can be from $150 up to $7,500 per household, per calendar year for daycare, eldercare, and other eligible expenses. Participants receive reimbursements up to the total amount contributed through each paycheck deduction. Dependent Care is available to use for daycare expenses for natural, adopted and foster children, who have not reached their thirteenth birthday and family members who cannot care for themselves.

All dependents must live with you for more than half the year and be claimed on your federal tax return.

Funds are added to your balance with each paycheck. To be reimbursed, the amount you request must be in the account at the time of your request. Reimbursements for dependent care are received by faxing, emailing or mailing claim forms to Optum Financial at optumfinancial.com.

Below is a table showing the stacking order for how tax-advantaged expenses are paid.

Comparison of Each Tax-advantaged Spending Accounts 

Below is a comparison of each of the tax-advantaged spending accounts. Remember, if you enroll in the PPO Plan, you’ll automatically receive the HRA. If you enroll in the CDHP, you can opt in to receive the HSA. The Health Care FSA and Limited Purpose FSAs are available in addition if you want to maximize your tax savings.

*At age 65, you can use your Health Savings Account (HSA) for any purpose without incurring a penalty, but the funds will be subject to ordinary income tax if it is not a qualified expense. This means you can withdraw your HSA funds for nonqualified expenses without facing a 20% penalty which applies if you are under 65. However, you will still need to pay income tax on the amount withdrawn.