Oct 6th, 2009
Researching Health Savings Accounts
One of the changes with benefits at my full time job right now is the implementation of a kind of health savings account which they are calling a “Health Care Spending Account.” A health savings account lets a worker put away pre tax dollars to pay for some health expenses–effectively allowing the worker to not pay taxes on those items.
In my case, this effectively lets me keep 30% more of my money.
Health savings accounts require a decent amount of planning. Contributions are withheld from each paycheck. At least in our situation, if not all of the dollars put into the health savings account are not used by the end of the calendar year, they are lost–so planning is important.
I really need to do the math to make sure all of this works out without any loss of money, but I’m quite sure I’ll make use of this in 2010.
We love our HSA- but do learn the difference between an HSA (heath savings account) and an FSA (flexible spending account). HSA’s roll over year to year, and FSA’s expire at the end of the year. Different laws govern the use and type of plans that go along with each. With both, you can buy some toiletries and over-the-counter medicines, so if you discover you have too much in your FSA at the end of the year, a run on your local drugstore may be in order to stock the medicine cabinet- I know that’s what I did!
I wrote a long post on the research I did when I was switching from one type of plan to the other here.