As we know healthcare can be complicated and not easy to understand. At beneshop want to make sure you can understand what things mean when you are scrolling on our site. Let us start off with the basics. In simple terms, these accounts help you save money aside for paying for healthcare expenses. Usually, to use these funds you receive a debit card to pay for these expenses. These things Let’s get down to the nitty-gritty.
What is an FSA? According to healthcare.gov an FSA is:
- A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs
- You do not pay taxes on this money. This means you will save an amount equal to the taxes you would have paid on the money you set aside
- Employers may make contributions to your FSA but are not required to
- Funds DO NOT roll over year to year
What is an HSA? According to healthcare.gov an HSA is:
- A type of savings accounts that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs.
- While you can use the funds in an HSA at any time to pay for qualified medical expenses, you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) — a health plan (including a Marketplace plan) that only covers preventive services before the deductible.
- HSA funds roll over year to year if you do not spend them. An HSA may earn interest or other earnings, which are not taxable.
- Some health insurance companies offer HSAs (Health Savings Accounts) for their HDHPs. Check with your company. You can also open an HSA through some banks and other financial institutions.
We can have your back on helping you understand all things HSA/FSA
These are the basics. Don’t you wish you were taught this in school? That’s ok because we can have your back on helping you understand all things HSA/FSA.
Now here are the simple facts to remember:
- HSA’s: You must have a High Deductible Health Plan to enroll. Unused balances can roll over. There is a higher contribution limit. If you change your job this will follow with you. Your contributions can be taken out of your pay pretax.
- FSA’s: Your employer needs to offer this benefit. Your funds don’t rollover. Your FSA is tied to your job. Your contributions are pretax.
