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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