In today’s health insurance 101 series, we’re talking about the difference between a health savings account (HSA) and a flexible spending account (FSA). While both accounts are designed to save you money, they have significant differences that are important to understand in selecting which one is most beneficial for you and your family.
A key advantage to both funds is that you are able to contribute earnings before they are taxed, lowering your annual tax liability.
Set up through your employer, FSAs allow employees to contribute a portion of pretax earnings to pay for qualified healthcare costs. These funds are designed to pay for specific medical expenses. For 2017, the contribution limit for a medical FSA is $2,600.
Here are some pros and cons of the FSA:
To be most effective, have a reasonable estimate of upcoming medical expenses for you and your family to avoid losing any money at the end of the year.
Just like an FSA, an HSA allows you to contribute to a fund pretax. HSAs are designed for people who have high-deductible health plans. For 2017, this is defined as a deductible of $1,300 or more for an individual, or $2,600 or more for a family. With HSAs, you can pay for medical costs that aren’t covered at all by your insurance, such as Lasik eye surgery. For 2017, individuals can contribute $3,400 to an HSA and a family can contribute $6,750.
Explore the pros and cons of the HSA:
Bright Health offers HSA-qualified plans for individuals, but FSA options are only within group insurance. Regardless of the plan you choose, we suggest you contact a financial planner or advisor to help you make the right choice for you and your health insurance needs.
Author: Stephanie Sample
July 5, 2017