Chances are if you’re employed your employer offers flex benefits or health savings of some sort.

If your employer offers benefits to you as a full time employee, chances are you may have been offered the opportunity to participate in either a health savings account (HSA) or a flexible spending account (FSA).  What are they, and what’s the difference between the two?  Most importantly, do you really lose the money you put into these accounts from your own paycheck if you don’t use it before the end of each year?

Flexible Spending Accountsd vs. Health Savings Accounts

Almost all health insurance requires individual and family deductibles.  Sometimes you are required to pay an office visit – or copay – every time you visit the doctor.  Maybe you have health insurance but not dental or vision insurance and you need a filling or a new pair of glasses.  Or perhaps you came down with the flu and you need a handful of over-the-counter medications to make it through the week.  Regardless of what health care costs you must pay for out of pocket in a given year, these expenses can add up quickly.  Therefore, flexible savings accounts or health savings accounts are fantastic benefits to have available.

What is the Difference?

Even though both options are used to pay for health care costs, there are some important differences to consider before choosing which you will sign up for.

Flexible Spending Accounts

These benefits are offered and controlled by your employer.  This money is an amount you choose at the beginning of each year for you to use the rest of that year, and is pulled before tax (meaning you don’t have to pay tax on this money) from each paycheck for you to use for any medical expenses not covered by your health insurance.  If you leave the employer that money is lost and it does not earn any interest.  Any money left in the account at the end of the year is lost as well.  In the event you need more money than what is in this account,  you are able to request more as long as it is made up from your remaining paychecks before the end of the year.

Health Savings Accounts

Health savings accounts are benefits that are actually controlled by you instead of your employer.  This money does earn interest over time, and you do not lose it if you don’t use it by the end of the calendar year (it carries over).  However, you are not allowed to go over the amount in the account, but you can take the account with you if you change employers.

However, as anyone can qualify for the flex benefits, that is not the case for health savings accounts; you must have a health insurance plan with a high deductible before you even qualify.

Either of These Accounts Are Great Benefits to Have

Whichever you choose, flexible spending accounts and health savings accounts are fantastic ways to plan ahead for many things, from co-pays to new glasses and even just to have in case of a large, unexpected medical bill.  Just make sure that if your account is the type that does not roll over at the end of each year, you use as much as you can before then – it’s money from your paychecks!  If you are needing dental treatment at our office, schedule your appointment now to ensure you can use these benefits before you lose them.