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