Date: June 1, 2017<\/p>\n\n\n\n
The financial challenges that go hand in hand with paying for health care are among some of the most significant many families face. Numerous health care options exist, including two consumer-directed plans \u2014 health savings accounts and flexible savings accounts. Understanding the difference between the two will help you decide if they\u2019re viable options for you.<\/p>\n\n\n\n
Establishing an FSA<\/strong><\/p>\n\n\n\n Your employer is responsible for opening a flexible spending account, or FSA, on your behalf, and it belongs to him, not you. But you can contribute to it with pre-tax dollars deducted from your paycheck up to $2,550 as of 2015. Any taxes withheld from your pay are based on what\u2019s left after your FSA contribution. <\/p>\n\n\n\n You must decide in advance how much of your paycheck you want to contribute to your FSA for the year, and you\u2019re locked in to this annual amount after you declare it.<\/p>\n\n\n\n Establishing an HSA<\/strong><\/p>\n\n\n\n You can open a health savings account, or HSA, yourself \u2014 you don\u2019t need your employer\u2019s cooperation, and you<\/em> own it. This type of account is also funded with pre-tax money, and your employer can add to it if she chooses to. If you contribute to your HSA with money that\u2019s already been taxed, these contributions are tax deductible. You have the right to choose how the money in your HSA is invested, unlike with an FSA. If you opt for an HSA, you can contribute up to $3,350. This limit is not expected to change in 2016.<\/p>\n\n\n\n Maintaining Other Health Insurance Coverage<\/strong><\/p>\n\n\n\n You\u2019re not required to carry additional health insurance coverage if you choose an FSA. But if you have an HSA, you must be covered by a compatible, high-deductible health plan, and you cannot be anyone\u2019s dependent for tax purposes.<\/p>\n\n\n\n Making Withdrawals<\/strong><\/p>\n\n\n\n You can withdraw funds from your FSA for all qualified medical expenses, including copays, coinsurance, deductibles and those medical expenses not covered by your insurance if you\u2019re carrying an additional health plan. You can make the same withdrawals from an HSA. Neither FSAs nor HSAs cover over-the-counter medications unless they\u2019re prescribed by a physician. <\/p>\n\n\n\n Although you must be enrolled in a HDHP, or a high-deductible health plan, to make contributions to your HSA, you can withdraw the money even if you\u2019re no longer covered by that plan. Your withdrawals are never taxed provided you use them for qualified medical expenses. You\u2019ll pay a 20 percent penalty plus taxes, if you take the money out of your HSA for any other reason prior to age 65. The penalty is waived after age 65.<\/p>\n\n\n\n You Could Lose Your FSA Contributions<\/strong><\/p>\n\n\n\n You can begin using the money in your FSA before it\u2019s fully funded for the year, which isn\u2019t the case with an HSA. And, if you have any money left in your FSA at the end of the year, you\u2019ll lose it. Your employer may allow you to roll over as much as $500 of any unused money to the next year or give you a little extra time (until March 15) to use the funds. <\/p>\n\n\n\n The possibility of losing your funds is an important consideration when you\u2019re deciding at the beginning of the year how many pre-tax dollars you want to direct to your FSA. Money you invest in an HSA remains yours even if you don’t spend it all by the end of the year.<\/p>\n","protected":false},"excerpt":{"rendered":" The financial challenges that go hand in hand with paying for health care are among some of the most significant many families face. Numerous health care options exist, including two consumer-directed plans \u2014 health savings accounts and flexible savings accounts. Understanding the difference between the two will help you decide if they\u2019re viable options for you.<\/p>\n","protected":false},"author":59,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"","_seopress_titles_title":"What's the Difference Between HSA and FSA? | Quicken","_seopress_titles_desc":"The financial challenges that go hand in hand with paying for health care are among some of the most significant many families face. Numerous health care options exist, including two consumer-directed plans \u2014 health savings accounts and flexible savings accounts. Understanding the difference between the two will help you decide if they\u2019re viable options for you.","_seopress_robots_index":"","inline_featured_image":false,"footnotes":""},"categories":[63],"tags":[],"class_list":["post-2280","post","type-post","status-publish","format-standard","hentry","category-jobs-career"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/2280","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/comments?post=2280"}],"version-history":[{"count":2,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/2280\/revisions"}],"predecessor-version":[{"id":4766,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/2280\/revisions\/4766"}],"wp:attachment":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media?parent=2280"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/categories?post=2280"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/tags?post=2280"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}