Deciding Between An HSA And An FSA In 2019

Healthcare is expensive. This is a fact that everyone knows. However, despite being a widespread reality, some still fail to prepare for the inevitable. In the end, these individuals end up scraping every single penny because their healthcare plan did not cover certain treatments or the diagnosis wasn’t covered. It is an absolutely nightmare, but it is a nightmare that can be prevented if you take time to prepare for it. If you are employed, it should be one of your priorities to save part of your salary for healthcare.

Depending on the employer, some employers offer plans that will help their employees prepare for healthcare related expenses. The most popular plans are health savings account (HSA) and flexible spending accounts (FSA). HSA and FSA aim to help you set aside money for future healthcare needs, but these two are different from each other. Knowing more about HSA vs FSA 2019 will be of great help to you.

HSA vs FSA: The Basics

Health Savings Account (HSA)

  • This enables you, the employee, to save money (pre-tax dollars) through salary deduction. This is a special tax-advantaged bank account. The money saved in this account is then used to pay for out-of-pocket expenses by incurred by you or your dependents. The money saved, if not used within the year, rolls over to the following year and the next. This allows the employee to save more for future out-of-pocket expenses.

Flexible spending Account (FSA)

  • This enables the you to set aside pre-tax dollars from their salary. The amount saved can then be used for “eligible” out-of-pocket healthcare costs. The deducted amount is distributed for the whole benefit year and you can use it at the start of the benefit year.

HSA vs FSA: The Differences

HSA

  • If you have a high-deductible insurance plan then you can qualify for HSA
  • Contribution limit for individuals: $3,450; for families: $6,900
  • The account is owned by you, the employee.
  • You have complete access to this bank account and no one else.
  • Contribution does not have a yearly expiration. Amount rolls over from one year to another.

FSA

  • You qualify for FSA as long as your employer offers this plan.
  • Contribution limit of $2,650 per year
  • The account is owned by the employer. Any unused funds goes to the employer.
  • Only you can access your FSA account.
  • There is no rollover. You have three options: 1.) forfeit, 2.) Use the money within the 2.5 months grace period, 3.) Carryover a maximum of $500 to next year.

When deciding between HSA and FSA, always keep in mind your needs or your family’s needs. Choose the option that will cater to these needs.