Understanding HSA Vs. FSA Options

By Amy E. Feldman

PHILADELPHIA (CBS) - Despite the riveting hours of webinars your employer provides to explain benefits, many people still don't understand what they're getting, particularly in regard to money they deposit in either a Health Savings Account (an HSA) or a Flexible Spending Account (an FSA).

A health savings account is for employees whose employers have a high deductible health insurance, so employees deposit money tax free in an HSA to offset the cost of the high deductible, which can be rolled over if not used.

An FSA is independent of a particular medical plan. In an FSA, you tell your employer how much you want to be deducted tax free from your paycheck and it doesn't have to be spent on healthcare. Unlike an HSA, you can use the FSA for child care. But you have to use the funds you've declared in an FSA within the tax year, or you lose it.

For more information, contact your benefits department for an equally fascinating (but important) look at the plans.

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