We’ve all had frightening medical situations. Maybe you were sitting on the sidelines when a baseball nailed your little man and he had to be rushed to the emergency room. Perhaps you were doing yardwork, got stung by a bee and realized that you needed a $400 round of medicine for a previously unknown allergy. Or maybe you felt painfully rundown and needed to find answers that only a lab test would provide. Whatever the situation, medical expenses happen from time to time, and you never want to find yourself in a situation where you have to make a choice between proper medical care and its cost.
Luckily, there are easy ways to save money for medical expenses. Aside from your basic savings account, there are two notable tools that can help you put money aside tax-free. These are the Health Savings Account (HSA) and the Flexible Spending Account (FSA). The fact that they are tax-free means you are able to save more using them than you would if you simply had money in a traditional savings account. Both plans are used exclusively to pay for qualified medical expenses, but this has a broad definition and may include vision, dental, medical testing and medication costs too.
Of course, there are some differences between the two accounts.
Who is eligible?
The first is eligibility. The HSA is only available to people who have selected a qualified high-deductible insurance plan. The FSA plan is available to anyone who has a job-sponsored health care insurance plan. Your employer should be able to help you figure out which one you can use.
When can you add money?
The second difference is the time of year that you can put money into your account. With the HSA, you are typically able to change how much you add to the account at any point throughout the year. In contrast, the FSA plan generally requires that you establish an amount during the open enrollment period that stays consistent throughout the year.
When do you have to use the money?
The third, and most important difference, is what happens to the money at the end of the year. With an HSA account, there is no time period in which you must use the funds that you set aside. Once you put money in, it remains in an investment account until you need it for qualified medical expenses. If you never use it, you can withdraw it after age 65 without tax penalties.
On the other hand, the FSA requires that the money saved is used within the plan year. There are some companies that offer a grace period, meaning you have an extra two and a half months to use the funds. Beyond that, however, unused money is surrendered to the fund itself; either you use the money in the plan year, or you lose it.
The good news is that the the list of qualified medical expenses includes lab fees, which means you have time left in the year and extra money to take charge of your health! Now is the time to investigate why your energy level has been lower lately. Perhaps you are tired of the constantly running nose? Find out if you have an allergy. Blood tests can even help detect warning signs of a variety of medical conditions, from diabetes to arthritis, so you can begin feeling better more quickly. At Any Lab Test Now, we have more than a thousand tests available, and you’re able to use those FSA and HSA funds to cover the cost of your tests. It’s a great time to take advantage of the extra savings so you don’t lose them!