Posted: November 1, 2024

Maximizing Your FSA and HSA: A Guide to Smart Healthcare Planning

Understanding HSAs and FSAs

Flexible spending accounts (FSAs) and health savings accounts (HSAs) are valuable tools in benefits packages, allowing you to set aside pre-tax funds for health-related expenses, including prescriptions, doctor visits and more. Contribution limits differ, so it’s a smart move to consult a tax professional before opening an account. Many accounts include debit cards for easy access to funds, but if yours doesn’t, be sure to keep receipts to submit for reimbursement.

What is the difference between an HSA and FSA?

FSAs and HSAs have some important differences. FSAs typically have a “use-it-or-lose-it” rule, requiring you to spend the funds by the end of the year. They’re also tied to your job, meaning if you leave or lose your job, your funds expire with your employment termination date.
In contrast, HSA funds accrue, rolling over from year to year, and remain available even if you change jobs. HSAs are tied to high-deductible health plans, but the money remains yours to use whenever needed, even if your employment status changes.

HSA- and FSA-eligible items

HSA and FSA funds can be used for obvious health-related expenses such as prescription medication and hospital bills. But they can also be used for other qualified medical expenses. The following items and services are usually eligible for payment with your FSA and HSA funds, but be sure to check your individual plan:

1. Over-the-counter medication and menstrual products


2. Telemedicine visits


3. Maternity supplies, such as breast pumps


4. Sunscreen (must be SPF 15 or higher)


5. Transportation and travel for medical care


6. Weight-loss programs


7. Medically related home improvements (for example entrance ramps and handrails)

What isn’t covered? HSAs and FSAs don’t cover things like cosmetic procedures, monthly health insurance premiums or gym memberships.

Getting the most out of your FSA account

Now is the time to think about spending the funds left in your FSA and how you’re going to spend them by the end of the year. Do you have any outstanding medical bills, or doctor appointments you can schedule for the next few months? One thing to steer clear of is stockpiling—the IRS tends to frown on stocking up on two years’ worth of contact lens solution and ibuprofen.

Getting the most out of your HSA account

Because funds in HSAs roll over from year to year, there’s no immediate need to spend the money in your account. Think about expenses you and your family may incur soon—vaccinations, dental visits, and new glasses. With a WaterStone Bank HSA, your money earns interest, and you can even invest a portion to grow your savings over time.

To learn more about the advantages of HSAs, find a WaterStone Bank branch near you or contact us for more information.