Health Savings or Flexible Spending Account

Health Savings Account (HSA)  dollars may be used for qualified medical expenses incurred by the account holder and dependents. According to IRS Section 213(d), “[an] expense has to be primarily for the prevention and alleviation of a physical or mental defect or illness.” In addition, COBRA premiums; health insurance premiums in conjunction with unemployment benefits; qualified long-term care premiums; and health insurance premiums paid by those over age 65 (other than for a Medicare supplemental policy) may be paid with HSA dollars.

Some examples of eligible expenses:

• Annual Physical Examination
• Birth Control
• Breast Pumps and Supplies
• Chiropractor
• Contacts
• Dental Treatment
• Eye exam and glasses
• Hospital Services
• Nursing Home
• Operations
• Psychologist and so much more….

Your Health Care Flexible Spending Account (FSA) allows you to pay for eligible out-of-pocket medical, dental, and vision expenses using pre-tax dollars, helping you save on health care costs.

Eligible expenses must primarily be incurred to diagnose, treat, or prevent a physical or mental illness or condition and must be properly substantiated in accordance with IRS guidelines. Expenses are generally eligible to the extent they are not covered by your medical or dental insurance plan.

Examples of eligible expenses include, but are not limited to:

• Annual physical examinations
• Birth control
• Breast pumps and supplies
• Chiropractic care
• Contact lenses
• Dental treatment
• Eye examinations and prescription glasses
• Hospital services
• Nursing home care
• Surgical procedures
• Psychological services
• And many other eligible health care expenses

Depending on your employer’s plan design, you may be able to carry over a portion of your unused FSA balance into the following plan year. This allows you to retain funds for future eligible health care expenses. Rollover availability and limits are subject to plan provisions and applicable IRS guidelines.

The first and foremost difference between the two is that FSA is a spending account while an HSA is a savings account. Whatever you contribute to the FSA needs to be spent in that year while HSA funds can be used anytime even after the year has ended. The FSA can be used for both medical and childcare expenses while the Health Savings Account is geared more towards medical expenses.

Determining which benefit to offer is a huge decision. Please contact us and  one of our experienced Employee Benefits Specialist will assist you in determining if and what type of plan is best for you and your employees.