Health Savings Account (HSA) & Flexible Spending Account (FSA)

The primary purpose of a Health Savings Account (HSA) and a Flexible Spending Account (FSA) is to help individuals or families save and pay for qualified medical expenses. It provides a tax-advantaged way to save money for healthcare costs.

What is an HSA?

An HSA stands for Health Savings Account. It is a type of tax-advantaged savings account available to individuals who are enrolled in a high-deductible health plan (HDHP). An HDHP is a health insurance plan with a higher deductible than traditional health insurance plans.

Here are some key features and benefits of HSAs:

  • Tax advantages: Contributions made to an HSA are tax-deductible, meaning you can deduct them from your taxable income when filing your taxes. Additionally, the interest or investment earnings on the funds in the HSA grow tax-free.
  • Savings for medical expenses: The primary purpose of an HSA is to help individuals save for qualified medical expenses. These expenses can include doctor visits, prescriptions, hospital stays, and other eligible healthcare services.
  • Portability: HSAs are portable, meaning they are not tied to a specific employer or health insurance plan. You can keep the HSA and continue using the funds even if you change jobs or health insurance providers.
  • Accumulated funds: The money in an HSA rolls over from year to year. Unlike a flexible spending account (FSA), where funds may be forfeited if not used by the end of the year, the HSA balance is not subject to expiration. It can continue to grow over time.
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The average company that moves from another broker or PEO service to work with Isure, saves $1,800 per employee per year in benefits.

What is an FSA?

A flexible spending account (FSA) is a type of employer-sponsored benefit program that allows employees to set aside a portion of their pre-tax salary to pay for eligible expenses. FSAs are designed to help employees save money on certain qualified expenses by using pre-tax dollars, which can result in a reduction in their overall taxable income.

There are two main types of FSAs:

  • Healthcare FSA: This type of FSA allows employees to set aside pre-tax money to pay for eligible medical, dental, and vision expenses that are not covered by their health insurance plans. These expenses may include co-pays, deductibles, prescription medications, certain medical devices, and other qualified medical costs.
  • Dependent Care FSA: A dependent care FSA allows employees to allocate pre-tax funds to cover eligible childcare expenses for their dependents, such as daycare, preschool, summer day camps, and after-school programs. This type of FSA is particularly useful for parents who work and require childcare services.

Typically, employees must decide how much money they want to contribute to their FSA at the beginning of the plan year during open enrollment. The funds contributed to an FSA must be used within the plan year or within a grace period provided by the employer, which is usually a few months after the plan year ends. Any unused funds at the end of the plan year or grace period are typically forfeited, known as the “use-it-or-lose-it” rule. However, some employers may offer a carryover provision or a grace period to give employees more flexibility in using their FSA funds.

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The iSure Advantage

We work with some of the top industry experts in HSA and FSA administration to help find a solution for your team that meets the needs of your employees and your company.

It is important to note that we never charge you for using our services, our commission for assisting you comes from the insurance companies. We act as a broker and run quotes with all of the major carriers guaranteeing you the best rate for the benefits that best suit your needs as an employer.