Choosing Between Health Savings Account (HSA) and a Flexible Spending Account (FSA)
An HSA or Health FSA will allow you to defer pre-tax dollars for future medical expenses
incurred by you, your spouse and other tax dependents. You cannot be enrolled in both types of
account at the same time. This page is meant to help you determine which account would be best for you.
"Eligible Medical Expenses" for both plans includes health plan deductibles, copays, and coinsurance amounts, acupuncture, bandages and first aid supplies, contact lenses and glasses, fertility treatments, hearing aids, massage therapy, and some over-the-counter (OTC) medications (a prescription from your health care provider is required for massage therapy and OTC medications). See Health Equity's website for specific information on eligible expenses.
With both a Health FSA and an HSA, amounts you elect are deducted from your pay before taxes are calculated so you do not pay federal tax, FICA, and in most cases, state taxes on the dollars deferred. Most people can save approximately 25% on each dollar they set aside for medical expenses they are paying anyway. Review your medical expenses from last year that you expect to reoccur and any medical services you have planned for the coming year--this is a good indicator of the amount you should defer.
There are several important differences between an FSA and an HSA. You may not be enrolled in both at the same time. Some of the differences are summarized in the following table.
| Health Flexible Spending Account (FSA) | Health Savings Account (HSA) |
|---|---|
| You may be enrolled in any of the University's health plan options; however if you or your spouse contribute to an HSA, federal law prohibits you from also contributing to an FSA | You must be enrolled in the CDHP (a qualified high deductible plan) and not have any other health coverage; however, your family members may have other coverage |
| IRS limits allow each employee to contribute up to $2,600 in the Plan Year (minimum is $120) | You may defer up to $3,450 if you have single coverage or $6,900 if you have two-party or family coverage; if you are age 55 or older, you may defer an additional $1,000 |
| Amounts not used for eligible expenses incurred before the end of the grace period (September 15) are forfeited - requests for reimbursement must be submitted by December 31 | Your balance rolls over from year to year and can be used for future medical expenses; there is no deadline for requesting reimbursement |
| Your balance does not earn interest | Your account earns interest and may be invested; interest and earnings are also tax free if used for qualified medical expenses |
| Funds may be used to pay eligible medical expenses incurred during the plan year | Funds may be used to pay current and future eligible medical expenses, COBRA premiums, Medicare Supplement or Medicare Advantage premiums, and long term care premiums and expenses |
| If you leave the University or move to a position that is not benefit-eligible, funds not used for eligible medical expenses incurred prior to the change are forfeited unless you continue participation by electing COBRA coverage | Your account belongs to you and you can take it with you if you leave the University |
| You may use your full year's Health FSA election at any time during the plan year | You may only use funds that have already been deferred into your account |
| You may only change your election if you experience a qualified status change event (you must request this change within 90 days of the event or before the end of the plan year, whichever is earlier) | You may change your annual election at any time |
If you have any questions about a Health Savings Account, please contact HealthEquity at 1-866-346-5800 or email them at memberservices@healthequity.com.
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