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Saving for Healthcare
Tax-advantaged accounts that allow you to save specifically for medical costs
Which account is right for you?
Health Savings Account
(HSA)
Flexible Spending Account
(FSA)
Health Reimbursement Account (HRA)
Control
Owned by the employee
Owned by the employer
Control
Control
Owned by the employer
Employer & employee funded
Funding
Funding
Funding
Employer & employee funded
100% employer funded
Contribution Limits
$4,150 single, $8,300 family (2024)
Contribution Limits
Contribution Limits
Medical FSAs: $3,200 (2024)
Dependent Care FSAs: $5,000 (2024) if not filing married separatly.
Determined by the employer
Must be enrolled in a High-Deductible Health Plan
Health Plan Eligibility
Health Plan Eligibility
Health Plan Eligibility
Must be offered a group health plan by employer
Can be built to work with any health plan
Fund Availability
As they're contributed
Fund Availability
Fund Availability
Medical FSAs: On first day of plan year
Dependent Care FSAs: As they're contributed
X
Contributions are pretax or tax-deductible. Growth & qualified distributions are tax-free.
Tax Savings
Tax Savings
Tax Savings
Contributions are pre-tax & qualified distributions are tax-free
X
Rollover
Unused balances rollover into the next year
Rollover
Rollover
You forfeit any unused balance unless your employer allows a rollover ($500 cap)
Yes, if allowed by employer plan
Yes
Investment Capability
Investment Capability
Investment Capability
No
No
Portability
Yes, HSA stays with the account holder
Portability
Portability
No
No
IRS-approved medical/dental/vision expenses for participant and qualified dependents
Covered Expenses
Covered Expenses
Covered Expenses
IRS-approved medical/dental/vision expenses or qualified dependent care expenses.
Employer-approved expenses for employee and qualified dependents
Health Savings Account (HSA)
A Health Savings Account is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses.
Triple Tax Benefits
-
Contribute pre-tax money
-
Enjoy tax-free growth
-
Withdrawals for qualified uses are tax-free
The "Health IRA"
-
It can be used to help boost retirement savings
-
Contributions can often be invested into funds
-
No Required Minimum Distributions (RMDs)
Flexible
-
Uses include: co-pays, deductibles, etc.
-
Unused funds rollover to the next year
-
You own it so it's portable
Flexible Spending Account (FSA)
Flexible spending accounts come only as part of a benefits package from an employer — you can’t get one on your own — but the medical expenses you can use them for are the same as HSAs.
It is an arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars.
What's the advantage to the employee?
-
Contributions are pre-tax
-
Can make incremental contributions, but can still use the full annual amount right away
What's the advantage for employers?
-
Can choose to contribute or not
-
Can choose to allow some unused money to rollover
Health Reimbursement Account (HRA)
Health Reimbursement Accounts (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.
The employer funds and owns the arrangement.
What's the advantage to the employee?
-
Employer contributions are not part of wages, so they are tax-free
-
Unused money may rollover, employer decides how much
What's the advantage for employers?
-
Contributions are tax deductible
-
Can choose which qualified medical expenses money can be used for
-
Can choose if money rolls over at the end of the year
