Healthcare costs are going through the roof. One method for keeping them down is to open a Flexible Spending Account or a Health Savings Account in order to reduce your taxable income with qualified health expenditures. There are qualifications in which account you can have and what you can spend it on, so it’s important to choose wisely.
Flexible spending accounts are available to anyone, but they do have some drawbacks. In most instances you lose any amount you don’t use at the end of the year with a small amount of carryover in certain circumstances. These accounts can be used to pay doctor and hospital bills as well as prescription costs and even glasses and contacts and eye exams.
A health savings account is only available to those with high deductible health insurance plans, which is only about 19% of the population. The nice thing about these accounts is that you can roll them over in perpetuity and use them to pay for your medical expenses even when you are retired. There are also more qualified expenses with this type of account.
Learn more about the differences between HSA and FSA accounts as well as limitations and advantages to both from this infographic!
Provided by Frames Direct!