Put Your Benefits to Work: How FSAs and HSAs May Support Your Financial Goals

Open enrollment season is winding down at many workplaces, but for many people, the choices they just made about their healthcare coverage can still feel overwhelming. Between understanding deductibles, co-pays, premiums, and supplemental savings options, it can be hard to know whether you’ve made the right financial decisions for you and your family.

We’re here to help you feel confident, both in your coverage and in your wallet. If you enrolled in a Flexible Spending Account (FSA) or Health Savings Account (HSA), or you’re simply looking to understand how these options work, consider this your simple, cost-saving primer.

Understanding Your Healthcare Coverage
Your healthcare plan plays the biggest role in how much you’ll actually spend, regardless of any savings accounts that may accompany it. Below are a few core terms to know.

Deductible: What you pay before your insurance begins covering services.
Premium: The amount you pay each month to keep your insurance active.
Co-pay: A flat fee for certain services, like a standard doctor visit.
Co-insurance: The percentage you pay after meeting your deductible

Knowing how these pieces fit together can help you decide when to use your HSA or FSA, and whether it makes sense to change your coverage during next year’s enrollment period.

What’s the Difference Between an FSA and HSA?
FSAs and HSAs are both tax-advantaged accounts designed to help you pay for healthcare expenses, but they work differently and are available to different types of insurance plans.

Flexible Spending Accounts (FSAs)
FSAs allow you to set aside pre-tax dollars to pay for eligible medical expenses such as prescriptions, doctor visits, dental care, eyeglasses, and more.

Key highlights of FSAs

• You decide how much to contribute for the year, and funds are available to use on day one.
• Contributions reduce your taxable income.
• FSAs are “use-it-or-lose-it”: most plans require you to spend your funds by year-end, though some offer a small carry-over amount or grace period.
• Anyone with an employer-sponsored plan may be eligible. There’s no specific health plan type required.

An FSA may be a great option if you expect predictable medical costs each year or want to save money on items you already buy, such as contacts, sunscreen, or over-the-counter medications.

Health Savings Account (HSAs)
HSAs pair with High Deductible Health Plans (HDHPs) and may offer more long-term savings potential.

Key highlights of HSAs

• Contributions are tax-free, grow tax-free, and withdrawals are tax-free when used for qualified medical expenses.
• Your balance rolls over year-to-year. No deadline, no losing funds.
• HSAs belong to you, not your employer, meaning you take them with you if you change jobs.
• They can also be used as a supplemental retirement savings tool.

An HSA can be especially beneficial if you want a cushion for future healthcare costs, or if you’re looking for ways to save long term.

When Should You Use Your FSA or HSA?

A helpful rule of thumb:

• Consider using your FSA for expected, recurring expenses: Think prescriptions, allergy medication, dental cleanings, glasses, or first-aid supplies.
• Consider using your HSA for long-term planning or higher-cost medical needs: Many people let their HSA grow over time and use it for major bills, emergency care, or future retirement-age medical costs.

Both accounts may help you save, but how you strategize your usage may make a big impact on your budget.

Open enrollment may be ending, but your financial wellness is a year-round priority. FSAs and HSAs may lighten the load of healthcare costs and give you more control over how and when you spend your money.