HSA vs. FSA: See How You’ll Save With Each
November 5, 2018
If you’re looking for ways to save you and your employees money, offering a Health Savings Account (HSA) or Flexible Spending Account (FSA) is a great place to start. Below, we’ve outlined the key differences of an HSA vs. FSA so you can see how they work, the advantages to each and why you should offer them to your employees.
Health Savings Account
An HSA is an individually owned benefits plan funded by you or the employee that lets your employees save on purchases of eligible expenses. Employees must be enrolled in a High-Deductible Health Plan (HDHP) to be eligible, which lowers their insurance premiums.
HSAs have a triple-tax advantage, meaning distributions for qualified medical expenses and investment returns are tax-free, and contributions are tax-deductible. Health Savings Account funds can be invested, which lets employees grow their dollars.
Our HSA comes with a low investment threshold, and our online account and Benefits Mobile App makes it easy for employees to make the most out of their funds.
Flexible Spending Account
An FSA is an employer-owned account employees use to set aside funds for qualified expenses. Employees can enroll for an FSA during open enrollment, their time of hire or a status change. We offer four common types of Flexible Spending Accounts:
- Limited Medical
- Dependent Care
FSAs offer pre-tax savings on eligible expenses. Employees can enroll in a Limited Medical FSA alongside an HDHP and HSA.
FSAs also save you money. For example, if one employee is enrolled in a Medical FSA, he or she reduces the taxable income, which reduces the amount subject to Social Security and Medicare. You won’t need to pay Social Security or Medicare tax on the funds going into the FSA.
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