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Health Savings Accounts and Flexible Spending Accounts

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In this segment we talk about the differences between Health Savings Accounts and Flexible Spending Accounts. 

You’re probably familiar with a medical Flexible Spending Account (FSA), but did you know a Health Savings Account is a triple-tax win?

Health Savings Accounts, commonly called H.S.A.s, are tax-advantaged health savings accounts that can be used when you are on an IRS defined High Deductible Health Plan, such as Windstream’s new Consumer 5000, 6000 and 6300 plans.

Primary requirements, in addition to being enrolled in a Consumer Plan, to be able to use an H.S.A. are 1) not being enrolled in Medicare and 2) not being claimed as a dependent on someone else’s tax return. 

So, what are the advantages of a Health Savings Account?  

The IRS permits an employee to only have a medical FSA or an H.S.A. if you are enrolled in a high deductible health plan.  

Why might you want an FSA instead?

One final thought – what does tax advantaged or pre-tax actually mean? 

Dependent Care and Commuter and Parking Flexible Spending Accounts are still available whether you select an H.S.A. or FSA. 

For more details, check out Publication 969 from the IRS or talk to a tax professional.