Health Savings Account (HSA) v. Flexible Spending Account (FSA)

Are these alien terms to you? Well, you're not alone. Many employees don't realize these accounts are available. These accounts are here to help employees gain and manage more affordable health care. Here are the differences between HSAs and FSAs.

For employees enrolled in health care plans with lower payments with higher deductibles, HSA is a tax-advantage medical savings program. Funds that are deposited into the HSA are not federally taxed and roll over if not fully used. Eligible expenses include:

• Amounts you pay toward deductibles and co-payments under both the medical and dental plans.
• Certain qualifying procedures and services that are not paid for by the medical and dental plans.
• Vision care expenses, such as eye exams (if not covered), glasses and contacts. Laser eye surgery is a covered expense.
• Hearing care expenses, including exams and necessary hearing aids.
• Over-the-counter medicines and drugs, as long as the drugs are purchased for “medical care,” including amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Antacid, allergy medicine, pain relievers and cold medicines are examples of eligible expenses.
  

Employees enrolled in FSA can set aside a portion of their paycheck, which are not subjected to payroll taxes, to their account. Employers offer a list of uses employees can choose to use their FSA for medical expenses. Unfortunately unlike the HSA, coverage ends at the end of the "plan year".

There are two different FSAs. Medical Expense FSAs are for medical expenses that aren't covered by an employees insurance company, ex. deductibles, copayments, etc., but also coverage not included in the plan, ex. vision, dental, etc. The FSA must be used only on things that intend to treat or prevent medical conditions.

Dependent Care FSAs cover dependents that live with you while you're employed; young children or elderly To qualify for Dependent Care FSA:

• You are a single parent,
• You have a working spouse,
• Your spouse is disabled and unable to provide for his/her own care, or
• Your spouse is a full-time student for at least five months during the year while you work.

Both HSAs and FSAs have a cap on the amount on money in each account per year. Employees using HSAs can have between $130 and $10,000 in their account, while those using FSAs can only have up to $5,000.

Debit cards are issued to those enrolled in both HSA and FSA, which can only be used in cases of medical expenses. The cards cannot be used, and will not work, to pay for anything else. To learn more about where to use these debit cards, consult health care provider.

Now all that is up to you, is decide with account is right for you!