A Health Savings Accounts (HSA) and a Flexible Spending Account (FSA) are completely different, yet are commonly confused. Health Savings Account (HSA)
A Health Savings Account is a popular type of tax advantaged medical savings account available to individuals who are covered under a qualified (HSA eligible) high deductible health plan. They are available under both individual and group health plans.
Health Savings Accounts offer an attractive way to help fund your health plan/health care out of pocket expenses.
HSA’s are triple tax advantaged as: 1) Contributions, 2) Interest and investment gains, and 3) Distributions are all tax free.
HSA’s are personal and portable. The account and all balances are yours for life. There is no use it or lose it.
HSA’s are designed to be able to serve as a meaningful retirement component.
2022 Contribution limits are $3650 for an individual, $7,300 for a family, and an additional $1000 for anyone age 55 and older.
Flexible Spending Account (FSA)
A Flexible Spending Account (FSA) is a special account with your employer that you put money into that is used to pay for copayments, deductibles, some drugs, and certain other health care costs.
The 2022 FSA contribution limit is $2,850. This means you don’t pay taxes on this money, so you’ll save an amount equal to the taxes you would have paid on the money you set aside.
Flexible Spending Accounts are only available under employer sponsored group health plans.
Your FSA works by reimbursing you for proof of medical and dental expenses and a statement that it has not been covered by your plan.
Unused monies that are not used for reimbursement during the year are forfeited (i.e., use it or lose it).
FSA’s do not offer any investment opportunity and are plan year vehicles only.
FSA’s provide short term tax savings only.
FSA’s are employer owned.
FSA’s are available to be used with any health plan.