HSA v. FSA: Understanding health savings accounts

- It's open enrollment for most people sorting out their health insurance coverage for 2018. And something that's getting more traction these days is the Health Savings Account or HSA. But, many people are still confused by it.

Both allow employees to set aside money for healthcare costs that crop up. Sometimes your employer contributes to them.

         Here's the main difference.
FSA - The money must be used annually.
HSA - The money can roll over from year to year.  

        Allowable Pretax Contributions
FSA - up to $2,550
HSA - individual: $3,350
            family: $6,750

The HSA has something called the "triple tax advantage."  Lisa Brown, a money manager at Brightworth explains.

"The money you put into the HSA goes in before taxes, so you get a tax deduction on the money you put into the HSA. While the money is in the HSA you can invest it in different mutual funds, so the interest you earn on the dividends, you don't pay taxes, just like your 401k. When you pull the money out to pay for medical expenses, the money comes out tax-free."

There is no other investment vehicle, she says, that save taxes going in, doesn't make you pay while it's in there, and doesn't charge you on the back end.

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