Do you have anFSA?
Is it possible you mix up the two?
If so, youre not alone.
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Lots of people confuse these accounts.
it’s possible for you to open an HSA or FSA at work if your employer offers them.
Employers can also make contributions to these accounts.
If you open an account at work, your paycheck funds the HSA or FSA with pre-tax money.
HSAs and FSAs can be used to pay for qualified medical costs for yourself, your spouse or dependents.
Eligible medical expenses can include deductibles, copayments, coinsurance, prescriptions and many over-the-counter medications.
You also wont pay tax when you spend the money in your account on qualified medical expenses.
FSAs and HSAs are each subject to an annual contribution limit.
Their differences outweigh their similarities.
Flexible Spending Account Features
you might only establish an FSA with your employer.
This means your employer not you owns your FSA account.
If you leave your job, you lose your FSA funds.
In 2024, the contribution limit for a health care FSA is $3,250.
Its up to the employer.
A big advantage of an FSA is that all your funds are available immediately the day you enroll.
it’s possible for you to also use an FSA with anyhealth insuranceplan.
You cant deduct FSA contributions on your tax return.
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Health Savings Account Features
Heres where the primary differences between FSAs and HSAs come in.
You must be enrolled in one of these plans to contribute to an HSA.
In 2025, those minimums will increase to $1,650 and $3,300, respectively.
The minimum deductible for these plans increases slightly each year.
you might create an HSA on your own or at work with your employer.
Plus, unused funds roll over year after year.
Theyre not use it or lose it.
If you set up your own HSA independently, your contributions are tax deductible on your federal tax return.
Many health savings accounts let you invest your money in stocks, bonds, mutual funds and ETFs.
Plus, youll enjoy tax-free earnings and interest inside your HSA investment account.
Health savings accounts come with yearly contribution limits.
In 2025, those limits will increase to $4,300 and $8,550, respectively.
you could use the money any time for medical expenses, and youll never pay taxes on it.
In that way, it works a lot like a 401(k) for living on in retirement.
If youre looking for flexibility and are covered by a high-deductible health plan an HSA is a solid choice.
FSA accounts offer less flexibility than HSAs, but they can still help you save money for medical costs.
They also come with tax benefits.
Not all jobs offer flexible spending accounts.
If thats your situation, an HSA might be your only option.
However, its important to consider the high out-of-pocket costs associated with an HSA-eligible health plan.
You cant contribute to an HSA and a traditional health FSA in the same year.
This way, you contribute to your HSA for medical expenses and keep an FSA for dependent care expenses.