What is FSA and HSA Medical? - A Complete Guide

Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) are two popular tax-advantaged options that can help individuals save money on medical expenses. Both accounts allow you to set aside pre-tax funds to pay for eligible healthcare costs, but they have differences in terms of eligibility, contribution limits, rollover rules, and more.

Here is a detailed overview of FSA and HSA to help you understand them better:

Flexible Spending Account (FSA)

• Employee-sponsored benefit
• Use-it-or-lose-it rule
• Pre-tax contributions
• Can be used for eligible healthcare expenses

Health Savings Account (HSA)

• Must be enrolled in a high-deductible health plan (HDHP)
• Contributions roll over from year to year
• Triple tax benefits: tax-deductible contributions, tax-deferred growth, tax-free withdrawals for qualified medical expenses
• Higher contribution limits than FSA

It's important to note that FSAs are typically offered by employers, while HSAs can be opened by individuals who have an HDHP. Understanding the differences between these two accounts can help you make informed decisions about managing your healthcare expenses.

Understanding the distinctions between Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) is crucial for anyone looking to manage their healthcare costs effectively. With both options allowing you to save pre-tax dollars, knowing which to choose can have a significant impact on your finances.