What are Health Saving Accounts?

HSA & FSA are financial tools that allow us to take charge of our health care spending.  They are becoming more and more popular for good reason so we hope SaveYourBucks.com readers will find this article valuable. HSA’s allow us to save smartly!

It’s easy with a Health Savings Account or HSA. An HSA is used to save for qualified medical expenses for you and your eligible dependents, both now and in the future.

It works like a regular bank account; however, an HSA has big tax benefits. In fact, in most cases, there are three ways in which HSA helps you keep your money in your pockets and out of Uncle Sam’s. We will cover those three ways and more in this article.

Non-Payment of Income Tax with HSA’s

First, generally, you won’t pay federal income tax on the money you deposit into your account. Keep in mind the IRS sets limits on how much you can contribute each year

Secondly, you won’t pay income tax on the money you use for qualified medical expenses; that includes vision and dental expenses.

Thirdly, your savings grow income tax-free helping you create a nice little nest egg for retirement. More good news with an HSA, there’s no use it or lose it rule, which means the money in your account is yours to keep, even if you change jobs or health plans.

Who’s Eligible for an HSA?

The main requirement is that you’re covered under a qualifying high deductible health plan or HDHP. Although there are additional requirements defined by the IRS.

So, don’t wait! If you don’t already have an HSA, open one. If your HSA is already up and running, contribute to it. Start taking charge of your health care saving and spending with an Optimum Health Savings Account, an easy way to save smart.

Understanding HSA/FSA Accounts

The end of the year is quickly approaching, your to-do list is longer than ever and in the chaos of trying to get everything done, it’s easy to forget about your HSA/FSA funds. Depending on the amount you elected to set aside at the beginning of the year, you may have a few hundred dollars remaining in your account.

It would be fair to assume that spending, especially during the holiday season, is a simple thing, but the truth is there are specific “qualified expenses” for which you can use HSA/FSA funds. If you spend it on non-qualified items you could be responsible for a 20% penalty. 

You don’t have to worry though, we’ve made it easy for you to understand how your account works and we’ll even leave you with some suggestions on how to use the funds.

What are HSA/FSA Accounts?

Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) share many similarities, such as:

  • Contributions are pre-tax
  • Contributions are tax-deductible
  • Available through employers
  • Preset contribution limits
  • Share the same list of “qualified expenses”

Much like a checking account, HSA/FSA funds are managed by a financial institution. You will be provided a debit card that can be used to pay for qualified medical expenses throughout the year.

HSA vs. FSA: What’s the difference?

Who is eligible?

The biggest difference between the two is the fact that not everyone qualifies for an HSA. Only those with a high deductible ($1,350 or more for an individual or $2,700 or more for a family in 2018) health plan are eligible. FSA, on the other hand, is available regardless of your deductible.

Max Contribution

For 2018, the max contribution into an HSA is $3,450 for an individual and $6,900 for families. The max contribution into an FSA is $2,650.


Perhaps the greatest advantage of an HSA is that any remaining balance will roll over into the next year. With an FSA this isn’t the case. With most employers, FSA money is “use it or lose it” but you may encounter some exceptions to when your window closes in the form of one of two options:

  • A “grace period” of 2 ½ months could be offered to allow a bit more time to use up the previous year’s balance.
  • $500 rollover into the next year.

An employer can offer one of these two options but they are not legally obligated to offer either. To avoid any end-of-the-year surprises, be sure to check with your HR department.

Funds Transfer

If you change employers, you can take all HSA funds with you from one employer to another. With an FSA, you’ll lose the funds when you change employers.

Qualified Expenses

Now that you know the interworking of each account, let’s take a look at a few qualified expenses available through eye care providers.

  • Contact Lenses
  • Prescription Glasses
  • Prescription Sunglasses

When ordering glasses, remember to browse the upgrade options such as Premium Anti-Reflective coatings, Polarized filters (sunglasses), Hi-Index lens materials and Light Sensitive add-ons. With so many lens options you’ll be sure to find the right package to fit your budget and needs.

You can even spend your HSA/FSA funds on qualified purchases for your spouse, children or any other dependent that you claim on your taxes. If your child is grown and they are no longer being claimed as dependents but they are still on your health insurance, you can still use your HSA/FSA funds on them so long as they will be 26 by the end of the current year.

Don’t Wait

Hopefully, this clears things up and makes the end of the year rush a little less stressful. If you have a current glasses or contact lens prescription you can start shopping today for yourself or one of your dependents. Teenagers are notorious for waiting until the last minute to tell you they are all out of contacts so be sure to check their current status.

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