Often times I have patients who know they have a health account but never end up using it or remembering when it's too late. Why? The rules and general confusion around health care related expenses leaves many people too frustrated to try or too scared their account won't cover it.
I will go through the two most common savings plans used for health related expenses outside of your traditional insurance coverage. The two most popular examples of such accounts are: A Health Savings Account (HSA) and Flexible Spending Account (FSA).
First, let's start with the similarities. Both FSA's and HSA's are savings accounts which money is placed by you or your employer tax-free and can be used for certain qualified medical expenses. You usually receive a debit card for your account and can use it to pay for coinsurances, copayments, and certain office visits.
Health Savings Acount (HSA)
Think of health savings accounts as privately owned, with more freedom, and accounts that can follow you from job to job. HSA have the requirement that you have a high deductible insurance plan in order to qualify. They generally allow you more options such as higher contribution limits, changing your contribution amount throughout the year, and entire balance rollover from year to year.
Flexible Spending Account (FSA)
Flexible spending accounts can be used for the same expenses as HSA's but are connected to your employer. FSA's are generally an incentive offered by employers and are often contributed to by the employee and the employer. The drawbacks to FSA's are that they generally reset to a $0 balance at the beginning of the year or max rollover amount usually around $500. FSA's also do not allow you to change your contribution amount throughout the year and generally have a lower contribution limit.
These are just two brief overviews of options you may have to cover your health releated expenses. It is important to find out what options you may have in order to avoid losing an accrued savings dollars. Call your employer and healthcare provider to see if you have an account such as an FSA and if it is accepted in by your desired provider.
Know Your Options.
David Satterfield, D.C.