![]() By tapping into your limited-purpose FSA first, you can save more of your HSA dollars for future expenses. In this case, you can use your limited-purpose FSA only for certain expenses, like dental or vision care, until you reach your health plan’s deductible. One exception to this rule is pairing an HSA with a limited-purpose FSA (also called an HSA-compatible FSA, or post-deductible FSA). It’s uncommon to have an FSA and HSA at the same time, but not impossible. Funds from the HRA are then used to cover other medical expenses. If you have an FSA, expenses typically come from that account first. It gets tricky due to the possibility of double-dipping. Using your HSA, HRA or FSA in combination may or may not be possible - it depends on your circumstances. HSA HRA FSA © 2021 United HealthCare Services, Inc, All Rights Reserved. Administrative services provided by United HealthCare Services, Inc. Nice! Now that you know how each kind of account works, you’re ready to get the most out of your health care dollars.ĭISCLAIMERS: [Insurance coverage provided by or through UnitedHealthcare Insurance Company or its affiliates. Which of these is only funded by your employer?Īnd which one has a “use it or lose it” rule? Those are some of the similarities and differences between these three accounts. So, it’s a good idea to avoid putting more money into your FSA than you can spend in a plan year. The big difference with FSAs is they may follow the use it or lose it rule, meaning if you don’t spend your FSA funds within your plan year, you can’t carry it over to the next. You or your employer contribute pretax payroll deductions, which you can use for eligible medical and dependent care expenses. Moving onto our last type: the flexible spending account, or FSA.Īlthough they are offered through your employer, FSAs don’t have to be tied to a health plan. ON-SCREEN TEXT: [Flexible spending account As long as you have money in your HRA, you can use it to help pay for qualified out-of-pocket medical expenses.īut, because HRAs are only funded by your employer, you can’t take your HRA with you if you change jobs - it belongs to your employer. In some ways, a health reimbursement account, or HRA, is similar. ON-SCREEN TEXT: [Health reimbursement account Since it’s your HSA, the money in it stays with you even if you change employers, health plans or you retire. There’s no limit to how much you can save over time, but there are annual contribution limits. Spend your HSA dollars on qualified out-of-pocket medical expenses - and that’s also tax-free. You’re responsible for funding it - and your employer, family and others can put money into it if they choose.Įvery dollar you contribute to and save in your HSA is tax-free. Let’s take a look at where they’re alike - and where they’re not - starting withĪ few things to know: you can open an HSA when you enroll in certain high deductible health plans. You may have heard of any one of them:Įach account works in its own way to help you save and pay for eligible out-of-pocket medical expenses. Many health plans include an account designed with money-saving opportunities in mind. You don’t pay federal, state or Social Security taxes on this money. Tax benefits include tax deductible contributions and account holders can build up their HSA by earning tax-free interest as well as tax-free returns from investing their funds.Īn HRA is tax-free for both you and your employer. You can only use the money for out-of-pocket expenditures or qualified medical expenses - health insurance premiums don’t qualify. You can’t take an HRA with you when you go (it belongs to your employer.) (Once you’ve established an HSA, it’s yours forever.) If you leave your job, you can take your HSA with you. Even if you stay at your job, you could lose your FSA money if you don’t use it within one benefits year - so it’s a good idea to not park more money in your account than you can usually spend. You can use your HRA for premiums and medical expenses. ![]() This does not include paying for premiums. It can only be used for qualified medical expenses. Like any personal savings account, there’s no limit to how much you can save over time.Īn HRA is funded entirely by your employer. ![]() Any unused funds continue to roll over year to year. Your employer, family and others can put money into it if they choose. These amounts generally change every year. There's a set maximum for self and a different maximum for families. You contribute pre-tax money via payroll deductions. It doesn’t have to be tied to a health plan. You establish an FSA through your employer. If your employer offers this type of health plan, you will get an HRA when you sign up for the plan. You must have a high deductible health plan that meets a deductible amount set by the IRS to be eligible.
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