What are HSA and FSA?
Can I use my HSA and FSA funds for visits with Dr. Jones?
HSA and FSA funds can be used to pay for your visits, supplements, and services with Dr. Jones!
What are HSA and FSA?
HSA (health savings account) and FSA (flexible spending account) plans are like personal savings accounts. However, the funds in the accounts can only be used for qualifying medical expenses.
Health savings accounts (HSA) combine high deductible health insurance with a tax-exempt savings account that can be used to pay for certain medical expenses. It’s common for health insurance providers to offer HSAs. If yours doesn’t have one, you can open a separate HSA account at most financial institutions.
Each year, you decide how much to contribute to your HSA account, though you cannot exceed government-mandated maximums. If you have an HSA through your workplace, you can set up easy automatic contributions directly from payroll. You will receive a debit card or checks linked to your HSA balance, and you can use the funds on eligible medical expenses, such as your visits with me.
HSAs also have great tax advantages. The contributions you make to your HSA happen before your income is taxed, so you don’t pay taxes on the account’s growth, and if you make withdrawals for eligible expenses, you don’t pay tax on that money either. Because income is taxed after you make HSA contributions, you will be taxed as though you make less money, thus lowering your tax burden.
Another benefit of HSAs is that they can be invested in mutual funds, stocks, and other investment tools to generate more money. Different companies can help you do this, depending on your investing preferences. Any unused balance in your HSA also rolls over into the next year.
Flexible spending accounts (FSA) are quite similar to HSA accounts. If FSA is included in your benefits plan, it lets you use pre-tax dollars to pay for eligible health care expenses for you, your spouse, and your eligible dependents. Although FSA has lower contribution limits than HSA, there are no eligibility requirements. FSAs are a good choice for anyone who doesn’t qualify for HSA as you can save money on eligible expenses that you are paying for out of pocket.
One important thing to know about FSAs are that they are generally “use it or lose it”, meaning that you forfeit any unused balance at the end of the year. It is important to know your plan year start and end dates. Your service date must be within your current plan year, which is not necessarily when you pay for the service.
If you have more questions about your specific HSA/FSA account options, talk to your employer’s human resources representative.
Sources:
Crone, Emily Starbuck. “What Is an HSA?” NerdWallet, NerdWallet, 2017, www.nerdwallet.com/blog/health/what-is-an-hsa/.
Kappel, Mike. “FSA vs. HSA: What's the Difference? | Excellent Overview.” Payroll Tips, Training, and News, Payroll Tips, Training, and News, 5 Nov. 2018, www.patriotsoftware.com/payroll/training/blog/fsa-vs-hsa-what-s-the-difference/.
NerdWallet. “What's the Difference Between HSA and FSA?” NerdWallet, NerdWallet, 24 Oct. 2017, www.nerdwallet.com/blog/health/employer-offers-hsa-fsa-whats-difference/.
