dime image credit wikipediaManage health care expenses with a personal health account

Posted November 9, 2015

With rising health care costs, personal health accounts offer an excellent opportunity for getting more for your money—and can even offer tax advantages.Three options you may wish to consider are the Flexible Spending Account, Health Savings Account, and Health Reimbursement Account.
 
A Flexible Spending Account (FSA) is set up by your employer in conjunction with your company medical plan. It is funded by you (and sometimes your employer) to pay for qualified medical expenses such as prescriptions, office visits, and eye and dental exams.

  • At the beginning of the year, you choose a certain amount to be deducted (pre-tax) from your paycheck.
  • Use it or lose it: Any unspent funds are forfeited at the end of the year.
  • The maximum amount you can contribute is $2,500
    If you leave your job, you cannot take your FSA to your next one. 

A Health Savings Account (HSA), unlike an FSA, is owned by you rather than your employer—but can be funded by you, your employer, or both and used for qualified health care expenses such as medical services, programs and treatments, and dental and vision expenses.

  • You can earn interest on your savings.
  • Won’t lose it if you don’t use it: Unused funds may be rolled over from year to year.
  • You can take it with you; contributions from your employer are owned by you, even if you change jobs.
  • At age 65, you can withdraw funds (which will be taxed as normal income) for any reason.
  • HSAs can be combined only with qualified high-deductible health plans.

A Health Reimbursement Account (HRA) is owned by your employer and set up for you to use to pay for qualified health care expenses determined by your employer, (typically deductibles, copays, coinsurance, and dental and vision services).

  • Contributions to an HRA can come only from your employer.
  • HRA generally does not pay interest.
  • You can’t take an HRA from one job to another job.
  • If you don’t use it, you'll likely lose it; employers are not required by law to let unused funds roll over.

Learn more

Review or download this informative handbook to get all the facts on personal health accounts.

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The information written about in this blog is not intended to be medical advice. Please seek care from a medical professional when you have a health concern.