HSA vs FSA: Which is Right for you?
- When it comes to setting aside money to pay for out-of-pocket health care expenses,
- you have a choice…
- a Flexible Spending Account or a Health Savings Account.
- Both options can be sponsored by your employer and may be administered by PayFlex.
- The accounts are similar in some ways and different in others.
- Both allow you to set aside pre-tax dollars each plan year to pay for eligible health care expenses.
- Because you don’t pay taxes on this money, this can mean savings for you.
- They both allow you to pay for out-of-pocket medical expenses during the plan year.
- An important difference between an FSA and an HSA is whether you spend during the plan year or choose to save for the future.
- The FSA is a spending account. You’re expected to spend the money you have set aside within the plan year.
- FSA funds are “use it or lose it”. They do not roll over at the end of the plan year and would be forfeited.
- On the other hand, the HSA is a savings account. You have the choice to save that money until you need it.
- HSA funds roll over from year to year and earn interest.
- Another important difference is that you have the opportunity to invest the money in your HSA.
- HSA funds can be invested in various mutual funds, and accumulate tax free for future health care expenses.
- To open an HSA, you must be enrolled in a qualified high deductible health plan. With the exception of some preventative services,
- this plan means you pay for medical expenses out of pocket until your deductible is met.
- If your employer allows, an FSA can be combined with an HSA, provided that the FSA is used for only dental and vision expenses.
- This has been a brief summary of FSA’s and HSA’s.
- Consider your options carefully and make the choice that’s right for you.