As Americans, we are constantly faced with possibility of changes within our health care system. Also, it’s easy to point out, that each calendar year things differ slightly anyways. It’s nice to prepare financially for these changes; but, what’s the best way? We are going to show you the difference between a health savings account verses a flexible savings arrangement.
Let’s learn the meanings.
To start, a Health Savings Account (HSA) is a type of savings account available to those who are enrolled in a high-deductible health plan. On the other hand, a Flexible Spending Arrangement (FSA) is an employer sponsored program that allows employees to set aside pre-tax dollars from their paycheck to pay for eligible health care expenses. The disadvantage to an FSA is that those funds expire every year. If you set aside 2k, and don’t use it by the year’s end, then you will lose it. #Bummer.
Now, there is nothing wrong with FSAs because some employers may match contributions. However, now is the time to really consider a Health Savings Account, instead.
What are some benefits of an Achieva Health Savings Account?
First and foremost, contributions roll over. In addition, the money continues to save. Since the idea of a Health Savings Account is to help manage the costs of a high-deductible health plan, you can make yearly contributions on a pre-taxed basis. Your funds will build up, year after year, to ensure the cost management associated with your health care.
Contributions for qualified medical expenses have no tax. In the scenario where a person does not have a Health Savings Account, they pay taxes on their wages, then use the money to pay for various medical expenses. If that person, instead, enrolled in a HSA, that money would pay for medical expenses directly; and skip the entire taxation of wages process. Make sure to keep any related receipts to justify the itemized deductions on your tax return.
The funds go toward your insurance deductible. As long as your health insurance covers the expense, the funds count as part of your deductible.
You have convenient access. Since Achieva members can withdraw funds through their debit card, Online Banking, or teller lines, it’s easy to use money from your HSA for health care payments.
Even if you change jobs, the contributions to your HSA stay put. Short and sweet, your money remains there.
Make a final consideration.
Flexible spending accounts are beneficial; but if you really want to make a longer-term investment, then having a Health Savings Account is the way to go. Investors also believe that HSAs reduce the growth rate of overall health care costs while increasing the efficiency of our health care system. HSAs not only stay with you regardless if you switch jobs, they also help with deductible payments. HSA participants can take advantage of paying for their medical expenses (out of pocket and retaining receipts), while allowing their accounts grow tax-free.