WHAT'S THE DIFFERENCE BETWEEN AN HSA AND AN FSA?

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Millions of Americans have a Health Savings Account (HSA) or Flexible Spending Account (FSA) to help cover their health expenses. Both come with some great perks and operate in much the same way, but there are some important differences you should know about, because they can affect the way you choose to handle your money at the end of the year.

At Luxton Optical, we’d like to help you understand these types of accounts so that you can use them to the fullest.

What is an HSA?

What is an HSA?

A health savings account, commonly referred to as an HSA, is available to people who have a High Deductible Health Plan (HDHP). It allows you to put pre-tax money into an account and use it on health-related expenses, such as new eyeglasses or contact lenses.

Some of the key components of an HSA that make it unique are:

  • A higher “contribution cap,” meaning that you can typically load it with more money than an FSA might allow (more on this below)
  • The account isn’t necessarily connected to any one employer or employer-provided health insurance
  • Funds roll over year to year, so you may not have to worry about interruptions to your savings

These attributes make an HSA a really good idea for someone who chose an HDHP because of their lower monthly premiums — particularly because you can pay some out-pocket-costs with HSA funds before you meet the high deductible. If you anticipate good health throughout the year, this can be very cost-effective.

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What is an FSA?

A flexible spending account, usually known as an FSA, operates much the same way as an HSA. Like an HSA, you deposit money before taxes and spend it on the same kinds of health-related expenses.

However, unlike an HSA, an FSA:

  • Carries a lower contribution cap
  • Is typically tied to an employer-provided health insurance plan and may be subject to loss if your work situation changes
  • Expires at the end of the year

This is a type of account that works really well for good planners — if you have known health costs throughout the year, this can make a lot of sense. People who end up overestimating expenses can reach the end of the year and consider other expenditures, such as some new, distinctive eyeglasses.

What is an FSA?

Use Your FSA Funds Before Year’s End

With good planning and a little good luck, many people’s FSAs have a fair amount of money in them at the end of the year, and the “use it or lose it” nature of an FSA means that any of that money that isn’t spent needs to be before it goes away at the end of the year!

We can help you understand the ins and outs of your HSA and FSA accounts here at Luxton Optical, and help you get the most out of them. A great option is to use this money on new eyewear, including a contact lens prescription, a new set of eyeglasses, or a lens upgrade in a current pair!

At Luxton Optical, we’re your neighborhood eyeglasses experts. We carry designer frames from Lafont, Maui Jim, Oliver Peoples, and more.

Call us today at (415) 851-7424 or drop by our Greenbrae store to learn how you can use your FSA funds on an optical upgrade.