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What is the Difference Between a FSA and a HSA?

FSA vs HSAWhat is the difference between a FSA (Flexible Spending Arrangement) and a HSA (Health Savings Account)? They both are great ways to get more bang for your buck because you can use money for your healthcare needs before Uncle Sam and the IRS take their cut. This means that if a person spent $100 on qualified healthcare, assuming a tax bracket of 25%, they would have an extra $25 to spend because the taxes haven’t been taken out.

The difference between FSA and HSA comes down to who is eligible and whether that money needs to be used by the end of the year.

In most cases, HSAs are highly recommended over an FSA if you have a health insurance plan that meets the requirements. The two biggest reasons for this are that a HSA is able to be invested and the holder of the account keeps the money when it is not spent. In fact, the money can grow tax free and used later in life when health expenses usually start to increase.

So what are the requirements for a HSA plan? You can go to the IRS website to see all the details, but here are the main points.

  • HDHP (High Deductible Health Plan) Single Person deductible of $1200 or Family Plan deductible of $2400
  • Out of pocket max for single coverage $5950 and Out of pocket max for family plan $11,900
  • The maximum allowed contribution for a year is $3050 for an individual and $6150 for family plans.

The requirement for a FSA or Flexible Spending Arrangement, or sometimes referred to a flexible savings account, is that your employer or health insurance must arrange it. It is very similar to a HSA, but it is a “use it or lose it” fund. Pre-tax dollars are still used to fund the FSA just like with the HSA, but careful planning must be made so as not to have any left over money in the account at the end of the year. Any money left in a FSA will be forfeited and nobody likes to lose money.

If you do find yourself in this unfortunate predicament, we can help. Instead of losing your FSA money, you can prepay for your chiropractic care and buy packs of adjustments. Some restrictions apply, but please call and we will be happy to go over your options with you.

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