Re: HSA and FSA; balancing act
I love my HSA account. I was extremely happy almost two years ago when our firm offered the HSA account. I agree with a prior member, either you have the HSA or FSA. I do not believe you have both concurrently. HSA is truely a savings account that rolls to the next year. There are two levels of HSA's, single or family levels. Single plan needs a minimum of $1,000 deductible and a family plan needs a $2,000 deductible to qualify as an FSA. I believe an FHA is that the employer will pay a portion of $2,000 but you need to fund the rest yourself.
With an HSA account you personally fund or a positon of and your employer funds the difference. For me singles are allowed to fund the maxium amount into the HSA of $2,650 because my deductible is $5k. I contribute roughly $1,900 and my firm contributes the difference. The $1,900 is deducted on the front page of Form 1040 like a tradtional ira, but one more advantage - there is no income limitations.
The HSA and FSA offer catastrophe insurance which means you are responsible for 100% of the deductible out of pocket and then the insurance provides 100% coverage.
It is true that you can purchase over the counter aspirin, cough medication, contacts, dental using your HSA account, but they do not qualify as part of your deductible. So the bottom line here is that you evaluate how healthly your family is and would you have the ability to rollover funds from year to year.
Any earnings generated in the account are tax free. As long as you the funds are used for health products you have no problem. You can use the funds to purchase long term care insurance, but can not purchase health insurance. If at the age of 59 1/2, you have the ability pull funds from your HSA account as if it was a traditional ira.