It’s that time of year again where businesses are looking for a competitive plan to keep their employees covered while individuals are looking for their best option for ensuring coverage for their families. The options seem endless and the task of selecting healthcare plans may be overwhelming. At Christianson, we’re here to help!
When you are introduced to your healthcare plan, one of your first questions may be: what’s the difference between HSA and FSA? You may know that they’re both tax-free ways to save, but you may not know the other ways that these two plans differ. So today we will help you identify those differences.
Health Savings Account (HSA)
A Health Savings Account (HSA) is a way to save tax-free money if you have a high-deductible health plan. With an HSA, you may contribute up to $3,450 for an individual and $6,900 for a family. This greatly exceeds your contribution allowance for an FSA. Also, the amount you choose to contribute can change at any time throughout the year based on your needs.
Does HSA Roll Over?
HSA offers a little more flexibility relative to FSA in regards to rolling over balances. With an HSA, your balance sticks with you and rolls over year to year. No part of your balance is impacted.
Flexible Spending Account (FSA)
With a Flexible Spending Account (FSA), you don’t have eligibility requirements like you do for the HSA, meaning that a high-deductible health plan is not required to contribute to a FSA.
With an FSA, you are eligible to contribute up to $2,650 in 2018 and changes to this contribution amounts may only be made/adjusted during the open-enrollment period. It’s important to note that if you have a balance in your FSA at the end of the year, those dollars will be lost as there is no rollover option with FSA.
Can I Choose Both?
No, unfortunately you cannot choose both an HSA and FSA unless your FSA is listed as Limited Purpose which means it is exclusively for use on vision and/or dental expenses.
Which Option is Best?
Selecting your most impactful option for a pre-tax savings option is really dependent on your life needs and what you believe your medical expenses will be for the next calendar year. It also depends largely on what portion of your paycheck you need, and what portion can be saved for the future.
It’s advised that if you qualify, you should opt for the HSA because of the rollover options and the higher contribution limits.
If you have questions about the difference between HSA and FSA or if you would like to speak to our Benefits Consultant Jennifer Quale, contact Christianson today!