Healthcare can quickly become expensive and confusing. One way to help save on healthcare costs is to save money is a specialized, tax-advantaged account. Flexible spending accounts (FSA) and health savings accounts (HSA) are both great options for helping pay medical bills, and can also be used for dental and vision care. Here’s bit about each to get you started.
HSAs are only available to people with a high deductible healthcare plan (HDHP). High deductible plans charge less in monthly premiums, but you’ll end up paying more out-of-pocket costs, that’s where your HSA comes in handy.
When setting aside money in an HSA, you don’t have to pay taxes on your contributions, earned interest, and your withdrawals remain tax-free. These funds are available to pay for any qualifying healthcare costs, and the money rolls over year-to-year. You can even take it with you into retirement.
But what if you’re not eligible for an HSA? Anyone can set up a FSA to set aside money for their healthcare expenses. The money in an FSA is tax-free, but you won’t be able to earn interest and the funds don’t roll over. This is a “use it or lose it” type of account. FSAs can be paired with any health insurance plan, but you have to determine your monthly contribution when you enroll in your insurance plan, and it can’t be changed throughout the year.
Pick the insurance that’s right for you and consider getting an HSA or FSA. Check out this infographic for more info:
Infographic Courtesy of Frames Direct https://www.framesdirect.com/knowledge-center/hsa-and-fsa-infographic.html