x
Breaking News
More () »

Yes! You should set up an HSA or FSA if you can. Find out why and how to maximize this benefit.

Do you know the difference between a Healthcare Savings Account and a Flexible Spending Account? Here's how to get the most out of either one. Sponsored by Premera.

SEATTLE — Health Savings Accounts are tax-advantaged savings accounts for healthcare expenses. But you can also get strategic and use it like a piggy bank. Flexible Spending Accounts are different than HSAs in significant ways.  Do you know the difference?

Health Savings Accounts (HSA)

"A Health Savings Account is basically a little pot of money that you can save and use to contribute towards your medical expenses," said Jennifer Robertson, Marketing for Premera Blue Cross.  It's a tax-advantaged savings accounts for healthcare expenses like copays, doctor visits, prescription costs, glasses, over the counter medications, and other IRS-approved medical expenses.  

To contribute to an HSA, you must be covered on a high-deductible health plan. Once enrolled, you make contributions to your HSA from your paycheck before taxes are applied so the money you contribute is not taxed. Individuals can contribute $3,550 per year and families can contribute $7,100. Once you have contributed to an HSA, the money is yours.  If you change jobs, you can roll it over to your new employer's plan. If you save the money until you reach age 65, the money can be spent however you like. It no longer has to be healthcare-related, so the account becomes pre-tax retirement savings with no withdrawal penalty.  

Using Your HSA as a 'Piggy Bank'

If you are a Premera member, you can manage your HSA online via ConnectYourCare.  If you pay out of pocket for a qualifying expense, you can request reimbursement from your HSA via the website. If you click "save it" on the website, that money is banked for you and you can withdraw it whenever you are ready. This can become a clever way to pay for a vacation or save money in case of an emergency. It’s your money and there’s no time limit. You can claim it anytime. "Imagine if you clicked “save it” each time you have a $30 copay for your family," said Jennifer, "That would add up over time, so you could have a nice pot of money to draw on if you need it."

Flexible Spending Accounts (FSA)

Flexible Spending Accounts differ from HSAs in that the FSA, "Is owned by the employer and those funds are available all upfront," said Jennifer.  When you sign up for an FSA you elect how much money you want to contribute to the account over the course of the year. If you don't use it by the end of the year, you lose it. If you do end up with excess in your account at the end of the year, Jennifer recommends using it to buy staples like over the counter medications or medical supplies that you use regularly.  

There are also dependent care FSAs," said Jennifer, "If you have a child in daycare, you’ll want to set this up". You may contribute up to $5,000 per year if you are married and filing a joint return, or if you are a single parent. If you are married and filing separately, you may contribute up to $2,500 per year per parent to a Dependent Care FSA, " It’s pre-tax money—and most parents with a kid in daycare will spend more than this in a year, so you might as well get the tax benefit. Just don’t forget to fill out the paperwork to get that money out of your FSA before the deadline".

RELATED: Panel Discussion with EvergreenHealth and Premera Blue Cross

Sponsored by Premera Blue Cross.  Segment Producer Joseph Suttner. Watch New Day Northwest 11 AM weekdays on KING 5 and streaming live on KING5.comContact New Day

Before You Leave, Check This Out