Now is the time to deal with your Flexible Spending Account (FSA) or Health Savings Account (HSA). Although they are similar in many ways there are a few key points which affect how you can (and should) spend them. If you have money you want to use for vision care or you’re looking to open a new account, here are the similarities and differences between an FSA and HSA.

What’s the Same?
Both the FSA and HSA are tax-free, have a maximum contribution limit, and can be used for eye care expenses.

Tax-Free Saving and Spending
Money put into and taken out of one of these accounts and used toward healthcare (like vision exams or eyeglasses) is tax-free. This allows the same amount of money to actually go farther than an equivalent amount in cash. If you were to use $1,000 from your HSA or FSA to meet your new year’s resolution of taking care of your eyes, all of it will go directly to that goal. You don’t lose any of it to taxation.

Contribution Limits
Only a certain amount of money can be put into each type of account per plan year. In 2016, an individual can put a maximum of $3,350 into their HSA (including any matching their employer might offer). For an FSA, this amount is $2,550.

In 2017, the IRS is allowing a small increase in contribution limits. For self-only coverage, you can add $3,400 to your HSA. With an FSA, the limit also increases $50, for a total of $2,600.

Vision Care
Both HSA and FSA funds can be spent to take care of your vision and maintain your eye health. Vision test and eye exam? Check. Contacts or glasses? Check. Everything from the diagnosis down to contact lens solution are generally allowed expenses for both HSAs and FSAs.

What’s Different?
Only an FSA has a time limit and only an HSA requires you to carry certain insurance.

Time Limit
One of the most important differences between these accounts is that the FSA funds must be spent within the plan year. It is a “use it or lose it” scenario. While some FSAs do have some type of extension, they are limited (if they exist at all). These provisions are either allowing a few hundred dollars to rollover or for an extra month or so to spend it. For an FSA, you should only contribute what you plan to spend in that year.

An HSA does not have a time limit to spend the funds. For this type of account, ideally you contribute the maximum possible so there are more funds to spend if or when you need them.

Eligibility Requirements
HSAs have different eligibility criteria than FSAs. One of these is a high-deductible health plan (HDHP). The other is you must be under 65 years old when you open the account. The HDHP needs to be your only insurance plan, although you can still have coverage for dental and vision. However, unlike the FSA, your HSA is not tied to your employer.

Each of the three available types of FSA have varying requirements which must be met. The standards they share are the FSA must be offered by an employer and, because of this, you cannot be self-employed. The type of insurance you have doesn’t affect your ability to have an FSA. You may even be able to have multiple FSAs, depending on your employment.

It is possible to have both an HSA and an FSA, with certain restrictions. If you already have an HSA, you can also start an FSA but it will be limited to only purchases for vision and dental care.

If you have one of these accounts, don’t forget they are meant to be used. Investing now is a way to protect the quality of your vision in the future.

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