7 Tips for choosing between an FSA and an HSA
Choosing between a Flexible Spending Account (FSA) and a Health Savings Account (HSA) can be confusing and lead to frustration. Here is a quick list of differences to help you in your mission to pick which plan is best.
– FSAs are always established by an employer, HSAs can be established by either an employer or an individual.
– The HSA must be established in combination with an HSA qualified high deductible health plan (HDHP). An FSA can be established without an HDHP in place.
– FSA contributions are capped at $2,550. HSA contributions are capped at $3,350 for individuals and $6,750 for families.
– FSA and HSA funds cover qualified medical expenses that are not covered by health insurance. Funds can also be used to pay for over the counter medications that a doctor has prescribed to the individual.
– An HSA goes with an employee when they are terminated or quit, an FSA is forfeited upon employment separation.
– HSA funds that are not used for qualified medical expenses remain in the account. FSA money not used by the end of the year is forfeited. Although employers to can allow a carry-over of up to $500 for the next year.
– In an HSA an individual may use funds untaxed for qualified medical expenses even when the individual is out of the HDHP.
These are only a few of the differences between a Flexible Spending Account and a Health Savings Account. If you have any questions on this topic speak to your HR staff or please feel free to contact me at johnd@benetechadvantage.com or leave a comment.
Sources: https://www.healthinsurance.org/faqs/what-is-the-difference-between-a-medical-fsa-and-an-hsa/
https://www.nerdwallet.com/blog/health/employer-offers-hsa-fsa-whats-difference/
