As the tax year comes to end, it’s time to think about how you’re going to save for 2014 health-care expenses and how you’re going to spend remaining HSA and FSA dollars.
The difference between health savings and flexible spending accounts
Both health savings accounts (HSA) and flexible spending accounts (FSA) reduce your taxable income. The HSA allows you to fund the account with pretax dollars while the FSA is pre-funded by your employer at the start of the plan year.
With an HSA, you fund the account before you spend it with pretax dollars. Just like any savings account, you must have money saved in your account before you can spend it and unused funds in the account are yours: your savings roll over to the next year with tax-free interest.
With an FSA, you “reimburse” your FSA in small increments—that are deducted before taxes—from your paycheck. FSA dollars can be used for a broader variety of expenses, such as child and elder care. One advantage of the FSA is that you can use the entire spending account in the first period for a medical expense—if necessary. But FSAs have a “use it or lose it” clause: at year-end, consumers with FSA accounts must spend all of their flexible savings during the plan year because unspent money reverts to the employer if it is not used.
Many HSA and FSA plans support the use of pre-tax dollars for the purchase of lab tests. Laboratory tests typically fall into the category called “Diagnostic and Preventive Care.” HealthCheckUSA helps you stretch your health-care dollars by offering affordable lab tests—from a simple glucose test to comprehensive cholesterol screens, hormone, nutrition, cancer and fertility screens. End the year on a note of pro-active health by ordering lab tests today.