FSA, HSA, PCP, HRA – there are a lot of acronyms in health care, and many of them can be very confusing. To help simplify at least one of the acronyms floating around I’ve compiled some information about HSAs to help you understand what they are and what the benefits can be for you.
First and foremost, HSA stands for Health Savings Account. HSAs allow you to pay for current and future medical expenses by saving money in an account specifically designated for medical expenses. Money saved in this account isn’t subject to the same taxes as the rest of your income and you can save approximately 20 percent on medical expenses by using an HSA rather than paying for our medical bills out of pocket.
Another important point to understand is that money put into an HSA does not have an expiration date. Unlike an FSA, which requires you to use your funds before the end of the year, funds in an HSA account stay there until you need them, even if it’s 20 years down the road! So adding money to an HSA now not only saves you money on taxes, but it can also be a great account to pull from come retirement when your medical expenses are much higher.
One final point I want to mention is that you can use your HSA to reimburse yourself for medical expenses now just like you can with an FSA. So if you have to pay money from your own pocket for a medical expense you can submit it for reimbursement from your HSA and use pretax funds to pay yourself back.
Don’t be intimidated with all the medical terminology. If you have a question about your insurance or what plan is best for you, give me a call. I would be happy to help you break down the jargon and understand what you are really getting and what works best for you. Give me a call to discuss any questions you may have.
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