What’s the difference between an HSA and FSA?

Man holding sunglasses

HSAs and FSAs are both great opportunities to save money on vision care that use your pre-tax dollars.

There are some key differences to note before signing up for either type of account, so let’s tackle some common questions.

Am I eligible for an HSA or an FSA?

Generally, you are only able to enroll in either an HSA or an FSA — not both. 

Health Savings Accounts (HSAs) are only available to people enrolled in a High Deductible Health Plan (HDHP). As the name suggests, these are health insurance plans with a relatively high deductible that participants have to meet before they’re eligible for benefits.

Flexible Spending Accounts (FSAs) are available under several types of insurance plans — or even if you don’t have health insurance. Since they’re more widely available, you’re more likely to be eligible for an FSA than an HSA.

Who owns the account?

When you sign up for an HSA, you own the account. You can take your account with you between jobs and access the money in that account in the same way you always have. You can continue making contributions to that HSA as long as you have an HDHP.

On the other hand, your FSA is an option that’s offered by your employer. They actually own the account, so if you leave your job or are fired, then your FSA doesn’t come with you. You’ll lose access to all of the funds in that account.

How much can I contribute?

The IRS sets limits each year on how much you can contribute to HSAs and FSAs, but the more important distinction is when you’re able to make those contributions.

With an HSA, you choose how much money you would like to contribute from each paycheck. You can change that amount at any time by contacting your plan provider, and the change will be made on your next paycheck.

With an FSA, you have to declare the amount you’d like to contribute for the entire year at the beginning of your benefits year. That total is taken out of your paychecks in equal amounts across the year. 

You’re not able to change or cancel your FSA contributions unless you have a qualifying event, like the birth of a child or a change in your marital status.

Do funds roll over?

This is one of the most vital differences between the two types of accounts. 

Since you own your HSA, funds roll over from year to year. The money you put in your account stays there until you eventually use it, so you can save for the long term over the course of your entire life.

An FSA is focused on your short-term health expenses for the year ahead. With few exceptions, any money you put into your FSA account has to be used within the year or it will disappear. Make sure to spend your FSA dollars on eligible expenses.

What kind of vision expenses are covered?

HSAs and FSAs can cover medical, dental and vision expenses as long as they’re considered eligible. These expenses don’t necessarily need to be for yourself, either — if your spouse or kid needs glasses, there’s a good chance your account will cover it. 

All sorts of eyewear are considered eligible expenses, including your prescription eyeglasses

You can also use your account for glasses you don’t necessarily wear every day, like prescription sunglasses or reading glasses. 

If you wear contacts, your contact lenses and even contact lens solution are covered.

Why enroll in an FSA?

If you don’t have access to an HSA, an FSA is the easiest way to start saving on vision care. FSAs are funded with pre-tax dollars, so you can make your money stretch toward paying for health expenses. 

Schedule your next eye exam and start putting your FSA to good use.

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