Spend Your FSA Account Contributions Before You Lose Them

An HSA, or health savings account, and a FSA, or flexible spending arrangement, are both accounts that allow people with health insurance plans to put away income for medical costs. Medical costs, also referred to as qualified expenses, include co-pays, deductibles and monthly prescription costs.

A primary benefit to HSA’s and FSA’s are that they are TAX FREE!
A primary difference is that HSA’s allow you to roll over unused contributions to next year while FSA’s are “use it or lose it.”

If you have a flexible spending arrangement account (FSA) with an unused balance and require laser vision correction or suffer with Pterygium, schedule an appointment with Dr. Michel before the end of the year.

HSA’s and FSA’s are similar in many regards and also quite different.
If you are eligible, choose an HSA over FSA. HSA’s allow you to put more money into the account and you can roll over the unused portion into the next year.

However, it is a bit more difficult to qualify for a HSA. You must have a high-deductible health plan ($1,350+ for individuals and $2,700+ for families) and your annual out-of-pocket expenses can’t exceed $6,550 for individuals or $13,100 for families.

Differences between a health savings account (HSA) and a flexible spending arrangement (FSA)
Health Savings Account (HSA)

  • Must be enrolled in a health insurance plan
  • Must be a high-deductible health plan (HDHP)
  • Annual contributions are capped at $3,450 for individuals and $6,900 for families
  • Can increase or decrease your contributions any time throughout the year
  • You can roll over unused balances into the next calendar year
  • If you move to another employer, you can take your HSA savings with you
  • HSA tax-free options
    • Deduct HSA contributions at end of year, or
    • Contribute to the HSA from your paycheck, pre-tax

Flexible Spending Arrangement (FSA)

  • Must be enrolled in a health insurance plan
  • Unlike the HSA requirement of a high-deductible health plan, FSA’s carry no eligibility requirements
  • Annual contributions are capped at $2,650
  • Can increase or decrease your contributions ONLY during open enrollment, if you move to another employer, or have a family status change
  • Basically, FSA’s are a “use it or lose it” account. No rollover’s are allowed. If you don’t use your contributions by year-end, you forfeit it all and must begin anew next year
  • If you move to another employer, you cannot take your contributions with you. However, if your FSA is with COBRA, you may be eligible.
  • FSA tax-free options
    • One option
    • Contributions are pre-tax; thus, your distributions will not be taxed