Flexible spending accounts (FSA) and health savings accounts (HSA) are both great healthcare plans that reduce an employee’s income tax liability and let them pay for medically-related expenses. It’s important for employees and employers to understand the difference between FSA vs. HSA.
What are FSA and HSA plans?
FSA – Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don’t pay taxes on this money.
HSA – Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.