What is the difference between FSA and HSA?
A Flexible Savings Account (FSA), also known as a Flexible Spending Account, is monetary employee benefit that may be offered by an employer for a specific purpose. FSA dollars are a portion of pre-tax employee earnings that are set aside for eligible use. In order to qualify for a tax-free FSA, employees must meet certain qualifications, such as uncovered medical care or child care expenses, as well as expenses associated with elder care. The terms of an FSA, including the withheld dollar amount, must be predetermined. An FSA usually has a “use it or lose it” policy. An FSA has many similarities to a Health Savings Account (HSA). Though unlike an HSA, a FSA is somewhat more limited. An HSA does NOT have a use it or lose it policy. The balance will continue to roll over if not used. An HSA is usually offered with a high deductible insurance plan. An HSA is also offered as a benefit from an employer.
