Acronyms can be confusing. Health care is complex. Acronyms in the health care space can seem like a nightmare—so we’re here to break down one of the more confusing aspects of a health care plan: FSAs versus HSAs.
What do they stand for? What do they do? How are they different? And, most importantly, should you use them?
What do they stand for?
FSA: Flexible Spending Account
HSA: Health Savings Account
What are they?
They’re essentially savings accounts used specifically to pay for qualified health care expenses (copays, deductibles, qualifying prescriptions, and certain medical equipment). You can elect to put your earnings, pre-tax, into these accounts, and use them to pay for your health care expenses throughout the year. Some employers will also contribute to these accounts on behalf of the employee, so be sure to look into your individual plan for complete details.
Should you use them?
If you spend any amount of money on health care expenses throughout the course of the year, it may make sense to contribute to an FSA or HSA account. We specialize in health care, not investments, but suffice it to say, using pre-tax dollars to pay for care can save you money in the long run by reducing your taxable income, and therefore these accounts can be a very cost effective way to pay for your health care needs.
The best news? FSAs and HSAs can both be used to pay for contact lenses, so if you have one of these accounts, consider using those funds when you order.
If you’re having trouble deciding what’s best for you, speak with your health care plan representative—they can help answer any questions related to your specific plan.
The Simple Contacts team is passionate about all things health. Follow along—we're just getting started.