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Flexible Spending Accounts & Health Savings Accounts

What are the differences between an FSA and HSA?

·    Flexible Spending Account (FSA)

o    Employee owns, but employee and/or employer can fund the account
o    Money is tax free
o    Needs to be spent on qualified medical expenses
o    Money does not carry over year to year and is lost if not used by year’s end

·    Health Savings Account (HSA)

o    Employee owns, but employee and/or employer can fund the account
o    Money is tax free
o    Needs to be linked to a high deductible health plan

–    High deductible for 2011 is $1,200 for single, $2,400 for family
–    No plans that are qualified to work with health savings accounts may cover prescription drugs as an insured benefit until after the deductible is met

o    Money carries over in the account year to year and is your no matter if you change employer
o    At the age of 65 account owner can withdraw monies without a tax penalty

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