What’s the Difference Between an FSA and an HSA?

Although FSAs and HSAs both allow you to use pretax income for medical expenses, it doesn’t mean these two programs are the same. There are plenty of things that separate them: qualifications, contribution limits, rollovers, and even withdrawal penalties.

But the biggest difference is that you can control an HSA and allow contributions to roll over, while the FSAs are owned by the employer. In most cases, you cannot have both HSA and FSA, so you have to choose.

When Can I Access the Funds?

You can start using your funds as soon as the coverage period begins. Just be aware that some can expire at the end of the year, so ask your employer or your insurer if this is the case. If it is, better think of a way to spend it.

What Is the Use It or Lose It Rule?

The IRS created a rule which states that all the money left in your FSA at the end of the year will be forfeited. If your FSA has a carryover feature, you may be allowed to carry up to $500 into your next year’s fund. It’s best to carefully estimate your costs.

What Can I Use Them for?

Both of these programs were designed to cover various medical expenses, including doctor’s appointments, filling out prescriptions, and FSA eligibility, for instance, even extends to certain types of alternative medicine like natural supplements.

Both FSA and HSA also cover the cost of prescription eyewear.

What Expenses Aren't Covered?

The programs both have several ineligible expenses, including:

• Cosmetic surgery;
• Counseling;
• Makeup;
• Prenatal care;
• Gym memberships.

How to Use FSA or HSA to Buy Prescription Glasses?

First, you will need to see your doctor and get a prescription for the news glasses (don’t worry, it will also be covered by your FSA or HSA). Then you can either look for your glasses online or visit a local provider. Use your FSA or HSA card to buy a pair of glasses you need (contact lenses or prescription sunglasses are also eligible), and keep the receipt in case the IRS will need it.

Can You Still Return the Glasses If They Were Bought with the HSA or FSA?

Yes. Your HSA or FSA card works just like a regular debit or credit card, so the seller can simply refund your purchase if you return the product. However, you should check the seller’s return policy in advance to make sure you have this option.

Additionally, if the FSA or HSA card expires in the meantime, ask the store if there is another way to reimburse the cost of the glasses.