Mid year is a great time to look at the differences between a medical FSA and a health savings account.
An FSA Perspective:
Medical FSA funding is limited to $2,550 in 2015. You decide how much, up to that limit, you want to fund at the beginning of the FSA plan year. This is based on expenses you think you may have during the year. The funds are pulled from your payroll by your employer and put into the FSA.
It works great if you have routine expenses. For example, you could set aside money for your son’s orthodontist bill, chiropractic visits to unkink your back, and those yearly visits to the dermatologist for a skin scan.
By mid year, your expenses should be matching your FSA payroll funding. If they don’t and you end up with too much money in your account, you could lose those funds. It happens more than you would think, excess money in your FSA. Extra money is usually not a problem for most people, unless it has a chance of “disappearing” into thin air. If you do not use the funds in your FSA by year end, you could lose it unless your employer allows for a grace period to use up the funds or they allow a $500 carryover into the next plan year. If not, the money goes back to the employer!
An HSA Perspective:
With the HSA, you can fund the account and spend it the way you need to. What ever is left in your account on December 31st, simply rolls over to the next year on January 1, building a balance for the future. There are no restrictions on when it has to be used and no limit on how much can be left in the account. How much can you contribute to your HSA in 2015?
- Single Contribution Amount $3350 (+$1000 catch up for those 55 and older)
- Family Contribution Amount $6650 (+$1000 catch up for those 55 and older)
So relax, enjoy the rest of your summer. Your HSA will be there when you need it. No worries that you will be losing valuable healthcare dollars. You and your HSA can roll on together for years.
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