HSA

In the world of health insurance, you and your family may be able to select from many different types of plans. Two popular coverage options that may provide valuable financial assistance and convenient versatility are health savings accounts (HSAs) and flexible spending accounts (FSAs).

What Are FSAs & HSAs?

FSAs and HSAs can provide policyholders with flexible ways to set aside funds for future health care needs. Additionally, FSAs and HSAs are often offered as part of employee benefits portfolios, making them available to many American workers. At their core, both arrangements function as specialized savings accounts, allowing policyholders to accrue nest eggs and rainy-day funds should medical needs arise.

What Does an FSA Cover?

FSAs and HSAs are typically used to help limit out-of-pocket health care costs. For example, you can use your FSA or HSA to pay for health care expenses, such as deductibles (but not insurance premiums). Similarly, you can spend funds on prescription medications, copays and medical supplies, such as bandages and crutches.

FSA & HSA: What’s the Difference?

While HSAs and FSAs may function similarly and often be utilized for common purposes, you should be aware of the following key differences:

• Eligibility and requirements may vary. HSAs require policyholders to be enrolled in a high-deductible health plan (HDHP). Furthermore, policyholders cannot be enrolled in Medicare or be claimed as a dependent on another person’s tax return. In the case of FSAs, generally available only through employers, policyholders are not allowed to use funds with a Health Insurance Marketplace plan.
• The way contributions are made to these accounts varies. When utilizing an HSA, you and your employer may contribute funds before taxes are taken out; you may also enroll in an HSA without an employer. Meanwhile, while also funded by pretax dollars, employees often make FSA contributions via direct deductions from their paychecks, potentially lowering their taxable income. Employers may also choose to contribute toward employees’ FSAs.
• The long-term availability of funds may vary. If you have an HSA, you can typically roll over unused funds at the end of each year, accruing savings for future medical needs. Conversely, FSAs generally require you to spend the money you’ve saved by the end of the year. However, exceptions may be available, including a grace period and limited rollover potential.
• Maximum contributions allowed for each type of account may differ. For example, in 2024, people with individual health insurance are allowed to contribute up to $4,150 to an HSA, while those with a family plan can contribute as much as $8,300. Meanwhile, individuals can contribute up to $3,200 to an FSA in 2024.

We’re Here to Help

At United Benefits Solutions, helping those in the Rockville Centre area weigh their health coverage options is integral to our mission. Contact us today to get started.