Using an HSA or FSA? 7 things to know about how they work

Published: Nov 17, 7:11am GMT+0

Health savings account vs. flexible spending account. They sound similar, and both are used to set aside pre-tax dollars for eligible health expenses. But there are many differences between the two.

A flexible spending account (FSA) is owned by your employer, while a health savings account (HSA) is owned by you. There are different rules about what and how you contribute to them. If your employer offers both options, dig into those differences to decide which is better for you.

Once you have an account, do they operate the same way? Not quite. This chart explains major differences and some similarities when using money you have set aside.

HSA vs. FSA

Will I lose money if I don’t use it?

HSA

 

No. Your entire contribution amount stays in your account until you use it.

FSA

 

Yes. The balance remaining at the end of the spending period (usually a calendar year) is forfeited. Some plans allow a specific amount to carry forward to the next year.

If I leave my job, do I keep the money in the account?

HSA

 

Yes. The account and all funds in it are yours.

FSA

 

No. You forfeit any funds in the account.

What expenses can be paid from the account?

HSA

 

Qualified medical expenses, defined by the Internal Revenue Code, except for non-COBRA health insurance premiums. Explore what’s eligible.

FSA

 

Qualified medical expenses, defined by the Internal Revenue Code, except for health insurance premiums. Explore what’s eligible.

Can I pay for my whole family’s expenses?

HSA

 

Yes. You, your spouse and your qualifying children can use the same account.

FSA

 

Yes. You, your spouse and your qualifying children can use the same account.

Can I spend in advance of contributions?

HSA

 

No. You can spend the account balance any time, but the amount pledged for the year can’t be spent in advance.

FSA

 

Yes.

Do I spend directly from the account or get reimbursed?

HSA

 

Both. Most plans offer a debit card. Or you can file for reimbursement.

FSA

 

Both. Most plans offer a debit card. Or you can file for reimbursement.

Do I need to submit receipts if I spend directly from the account?

HSA

 

No.

FSA

 

Yes.

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