What Is the Difference Between a Health Savings Account & a Flexible Spending Account?

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Health savings accounts and flexible spending accounts both help people save money for future health care expenses. However, the accounts have different requirements and benefits.

Eligibility

You can only contribute to a flexible spending account if your employer offers this option. You can only contribute to a health savings account if you have a high-deductible health insurance plan.

Time Frame

Funds put in a flexible spending account must be used by the end of the year or you lose them. Funds in a health savings account can be kept in the account indefinitely.

Limits

According to the Bureau of Labor Statistics, there is no federal imposed limit on how much you can put into a flexible savings account, but some companies may limit your contributions. You cannot contribute more than the annual limit for an HSA. For 2010, the limit is $3,050 for individual plans and $6,150 for family plans.

Warning

You cannot have both a flexible spending account and a health savings account, even though both may be offered by your employer.

Considerations

The federal government allows you to transfer money from your flexible spending account to your HSA once during your lifetime.

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