Most of us are no strangers to wanting to pull our hair out as we compare healthcare costs and various insurance plans. We all want to save more money on health, but most of us don’t want to resort to Craigslist ads or sketchy basement operations for our medical needs.
So how can you save money on healthcare without succumbing to desperate measures? The good news is, Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) each provide a valuable means of saving money on medical costs. Both FSAs and HSAs are tax-advantaged healthcare accounts where you can set aside money for qualified medical expenses without being taxed on the money deposited into the accounts.
While the two share some commonalities, they have some fundamental differences we will discuss below.
|Flexible Spending Account (FSA)||
Health Savings Account (HSA)
|· Typically created and owned by an employer.
· You are permitted to use the money in the account right away or after the first contribution.
· An FSA can be used with any type of health insurance plan.
· Funds within an FSA do not roll over at the end of the year, meaning funds will need to be used by then.
· Some employers can allow you to carry over up to $500.
· Contributions are limited to no more than $2,550 in 2016.
· Employee contributions are deducted from each paycheck throughout the year.
|· Can be established by an individual or their employer.
· Must be paired with a high-deductible health plan (HDHP).
· Can be funded by employee payroll deductions or employer contributions.
· Maximum contribution is $3,350 for individuals and $6,750 for families.
· An HSA is owned by the employee, meaning if he or shit quits or is terminated, the HSA funds go with them, regardless of if contributions were made by the employer.
· Money withdrawn after age 65 or for qualified medical costs is never taxed.
· Money withdrawn before a person turns 65 for non-medical expenses will receive a 20-percent penalty.
Compare healthcare prices, health insurance plans and savings accounts to decide which might be a good fit for your healthcare needs. Now take those extra dollars you’ve saved on your health and go by yourself something nice, like a taco buffet.