HSAs and FSAs are tax-advanced accounts that allow individuals to save money to pay for certain medical charges and expenses. Although they work in the same way, there are several differences that makes each account unique. HSA stands for Health Savings Account, and it is a handy way to save for medical expenses and reduce your taxable income. Where FSA stands for Flexible Spending Account and implement the ‘use it or lose it’ system. HSA vs FSA… let’s cover a few of the major points for each.
HSA vs FSA
What Is An HSA?
A health savings account can be established by an employer or employee, but, only to U.S. taxpayers who are already enrolled in a high-deductible health plan (HDHP). Employers may make contributions to their employees’ HSAs, and when money is drawn from this account for medical expenses, they are not taxed. Also, different from an FSA, funds that aren’t used roll over and accumulate year-to-year.
What Is An FSA?
A flexible spending account is established by an employer and is typically funded by pre-tax payroll deduction, but employers can contribute to the account as well. An FSA can be used to cover things such as co-payments, deductibles, and other medical expenses if they are not covered by health insurance. One of the major differences from an FSA vs HSA, is that a flexible spending account implements the use it or lose it policy. Any money in this account not used by the end of the year will be forfeited. Another note, funds are deducted from each paycheck and put into this account.
Choosing A Health Savings Account
When determining the difference between HSA and FSA, be sure to fully understand each plan and exactly what you will be receiving. Both accounts make managing your unexpected medical expenses easier throughout the year. You can open an HSA or FSA through your bank or other financial institutions.
At Fashion Eye Center, using the remainder of your health benefits is simple. Be sure to check out our monthly specials and save, especially during the holiday season. Call and make an appointment today!