Today I want to talk about Flexible Savings Accounts and Health Savings Accounts.
Both of these types of accounts offer you the option to defer pre-tax dollars to be used for medical expenses and FSA account has an option for Dependent care expenses (such as child care).
The difference between FSA & HSA is this:
Funds in HSA account are allowed to be kept in account if not all used in current year. This account becomes an investment account for the future. There are various investment options available, from savings account to index funds.
HSA account requires to have High Deductible plan to be associated with it.
FSA account for Medical care, requires you to use most of the contributed dollars, except for $500, which can be carried over to the next year.
FSA account for Dependent care, allows $5000 per year contribution in 2016 and has to be used in the year contributed.
If you haven’t taken advantage of these accounts before, think about what medical expenses you might have coming up next year. Why not pay for them with pre-tax dollars?