How to Make the Most Out of Your HSA or FSA


| 3 min read

Woman handing card to pharmacist
When preparing for future health expenses, nothing beats a health savings account or a flexible spending account. These accounts help you set aside pre-tax money for medical expenses that may arise during the year, helping save money while taking care of yourself and your family. While they are somewhat similar, a HSA and FSA are different. Here’s how:
  • HSAs are similar to a 401(k) retirement account; you can only enroll in an HSA if you have a HSA-compatible health plan (they often have high deductibles). With a HSA, you have flexibility over how much you contribute, the ability to keep your unused balance and additional tax benefits.
  • A FSA is set up by your employer. You decide how much to put in the account every year (up to $2,700) and use it to pay for qualified medical expenses. It works with the majority of PPO employer-sponsored health plans. One important note, you lose any unused funds remaining at the end of the year.
Here are some tips to make the most of your HSA or FSA funds:
  • Keep track of the funds you are using. Accounts often come with a debit card to access funds, but it is important to keep a good record on your own in case a discrepancy arises.
  • With a HSA, as long as you don’t go over your annual limit, you can change the amount of your contribution at any time during the year.
  • If you have a chronic condition or take regular medication, calculate how much you’ll spend in the year. This will help you see what extra amount will be left over so you know what you need to use up before the end of the year if you have a FSA. If you have a HSA, you can roll over unused funds.
  • Don’t just think that a medical expense is limited to a visit to the doctor or medication. Your funds can also be used for equipment like crutches, blood sugar tests, glasses and more.
  • Don’t be tempted to use funds for non-medical expenses. There are penalties for using funds improperly. They can’t be used on over-the-counter drugs, spa treatments, anti-aging creams or vitamins (unless your doctor prescribes them for you). Instead, if you have money left and the year is coming to a close, schedule any doctor’s appointments you’ve been putting off, look into dental work you need or try a smoking cessation program.
If you want to learn more about health care services for you and your family, these blogs are a good resource:
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MI Blues Perspectives is sponsored by Blue Cross Blue Shield of Michigan, a nonprofit, independent licensee of the Blue Cross Blue Shield Association