HSA vs FSA step by step
Understanding the differences, benefits, and uses of Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) is crucial for managing healthcare expenses effectively.
Quiz(20 questions)
1. What does HSA stand for?
Terms in this Study Set(20)
HSA stands for?
Health Savings Account. It's a tax-advantaged account for medical expenses.
FSA stands for?
Flexible Spending Account. It allows you to set aside pre-tax dollars for medical expenses.
True or False: HSAs are use-it-or-lose-it.
False. HSAs roll over year to year; funds do not expire.
True or False: FSAs are available to anyone.
False. FSAs are typically offered by employers and require a job.
Contribution limit for HSA in 2023?
Individual: 7,750. Additional $1,000 if over 55.
Fill in the blank: FSA funds must be used by _____ year-end.
the plan's designated year-end; usually December 31.
Main advantage of an HSA?
Triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals.
Comparison: HSA vs FSA funding?
- HSA: Funded by employer or employee. - FSA: Funded by employee, sometimes employer matching.
What happens to unused FSA funds?
They are forfeited at year-end unless a grace period is offered.
How can HSA funds be used?
For qualified medical expenses, like doctor's visits, prescriptions, and dental care.
Who owns the HSA account?
The individual. You can take it with you if you change jobs.
Can you invest HSA funds?
Yes, once a certain balance is reached, funds can be invested.
Can FSA funds be used for dependent care?
Yes, a specific type of FSA covers dependent care expenses.
Contribution limits for FSA in 2023?
Up to $3,050 per employee; limits may vary by employer.
Cause → Effect: Missing FSA deadline?
You lose any remaining funds; no carryover.
HSA vs FSA: Portability?
HSA: Portable, can be taken anywhere. FSA: Not portable, tied to employer.
True or False: HSA funds can be used for non-medical expenses.
True, but subject to taxes and a 20% penalty before age 65.
Example: Direct payment from HSA for a $100 doctor visit?
You can pay directly from HSA, reducing tax liability and saving money.
HSA eligibility requirement?
Must have a high-deductible health plan (HDHP) to qualify.
True or False: FSA can cover over-the-counter medications.
True, but only with a prescription since the ACA changes.
Questions in this Study Set(20)
1. What does HSA stand for?
2. What is a main feature of an FSA?
3. Which statement about HSA contributions is accurate?
4. True or False: You can carry over unused FSA funds to the next year.
5. What is a significant benefit of an HSA?
6. Which of the following is a requirement to open an HSA?
7. The contribution limit for HSA in 2023 for an individual is?
8. What happens to unused FSA funds after the plan year ends?
9. Can HSA funds be used for non-medical expenses?
10. Which is NOT a feature of an FSA?
11. Which of the following best describes HSA portability?
12. True or False: You must use FSA funds for qualified medical expenses.
13. What is the maximum FSA contribution limit for 2023?
14. How are HSA funds typically funded?
15. Which type of account can cover dependent care expenses?
16. True or False: HSA contributions can be made after tax deductions.
17. Can HSA funds be invested once a certain balance is reached?
18. What is a common misconception about FSAs?
19. What happens to HSA funds if you change jobs?
20. Which statement is true about FSA funds?
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