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FSAs and HSAs

A Flexible Spending Account, or FSA, is an employer-sponsored spending account that allows employees to decide how their health care dollars are spent. Employees can set aside a part of their earnings on a pre-tax basis to pay for qualified medical expenses. An FSA can be used along with any traditional health insurance plan and has tax advantages.* A Health Care Account, or HCA, is another name for an FSA.

A Health Savings Account, or HSA, allows members of certain health care plans to use pre-tax money to pay for qualified health care costs. A member with an HSA has a High Deductible Health Plan (HDHP). These plans are available to consumers looking for individual and family Marketplace plans and to employees whose employers offer such plans.

 

Facts About Flexible Spending Accounts

  • ​​Earnings deducted for FSA contributions are not subject to payroll taxes.*
  • There are several types of FSAs designed to cover different types of health care costs.
  • ​Medical FSAs can be used to pay for deductibles, copayments and coinsurance specified in a health plan.
  • ​Debit cards can be used with certain FSA plans.

Facts about Health Savings Accounts

  • If you pay for a qualified medical expense, withdrawals from your HSA are tax-free.
  • You take your HSA account with you, even if you change jobs or health plans.
  • No "Use It or Lose It": Your HSA funds roll over annually, regardless of the amount.

Comparing an FSA to an HSA

  • Both FSAs and HSAs, are used to pay for qualified medical expenses with tax-free dollars.*
  • FSAs can be used with almost any traditional employer-sponsored health insurance plan. 
  • To establish an account and make contributions, those wishing to use an HSA must be enrolled in a High Deductible Health Plan. 
  • FSAs are "pre-funded" by the employer, meaning the employee has almost immediate access to the full amount of funds they contribute to during the year.

FSA and HSA Resources

www.irs.gov

 

 

* Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), including products under our BlueEdge product portfolio have tax and legal ramifications. Blue Cross and Blue Shield of Montana does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. These materials, and any tax-related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials. You should seek advice based on your particular circumstances from an independent tax advisor, regarding the tax consequences of specific health insurance plans or products.

* Health Savings Accounts (HSA) have tax and legal ramifications. Blue Cross and Blue Shield of Montana does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. These materials, and any tax-related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the promotion or marketing of the transaction(s) or matter(s) addressed by these materials. You should seek advice based on your particular circumstances from an independent tax advisor regarding the tax consequences of specific health insurance plans or products.