Difference Between FSA and HSA
Every one of us wants to have health security for we don’t know what might happen to us in the future. We have no clue if we will somehow get sick on the following days to come. The government has come up to solutions on how to solve this problem. Having a health insurance may be the solution, so we have FSA and HSA.
What is FSA?
The term FSA stands for Flexible Savings Account. It is a form of a health insurance plan with several benefits to the owner of the account. Having a FSA requires you to deposit money monthly, some annually but it is to that year only yet the funds do not roll-over into the following year. The collected funds can be then used for future medical expenses and the best part of it is that it is tax free. There are different types of FSA and still you can avail all of it but the funds collected in one FSA cannot be transferred to the other account.
What is HSA?
The term HSA stands for Health Savings Account wherein Americans would save money for future medical expenses as well. HSA differs from FSA for the money paid upon deposit are tax free and unlike FSA, if not spent, the funds keep on rolling to the following years to come. One qualification to open an HSA account is that you must be a tax payer.
Differences in Brief:
- As you deposit money to your HSA account, the money adds up every year. On the other hand, FAS doesn’t.
- Upon depositing your money, HSA is tax free while FSA is.
- FSA is classified as a spending account while HSA is a savings account.
- HSA are used for medical expenses only, FAS however can be used on both medical and child care expenses.
- When you reach 65 years old, you can get the remaining money in your HSA account.