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If you’re looking for ways to save money on your medical bills, see if you’re eligible for a Flexible Spending Account (FSA) or Health Savings Account (HSA). Both are designed to help people with health insurance save on eligible out-of-pocket medical costs like blood pressure monitoring devices; chiropractic expenses; co-insurance amounts; contact lenses, eyeglasses and prescription sunglasses; crutches; flu shots and other vaccines; and smoking cessation programs. The accounts let you use pre-tax dollars for the expenses. Which one is right for you? Find out more here.


An FSA is a good idea if you expect to incur big medical expenses, such as if you need dental work or are having a baby this calendar year.

  • You’ll sign up for a program at work to withhold some of your salary to fund your FSA. You don’t pay income tax on FSA funds, and you can withdraw the money tax free if you use it for qualified medical expenses. Some employers contribute to workers’ FSAs.
  • FSAs are established by employers. Self-employed people are not eligible.
  • Each company sets its own limit on the dollar amount (or percentage of your salary) that can be contributed to an employee’s FSA ($3,000 is a common limit). You must use the funds during the calendar year or you forfeit the money, so strive to accurately estimate how much you’ll spend annually.
  • You can’t change the dollar amount that you contribute or drop out of the plan during the year unless you have a change in family status, like a birth, death, divorce, adoption or change in your spouse’s health insurance.
  • An FSA isn’t “portable”; it’s only good at your current job.


This plan might work well if you refill prescriptions often to treat chronic conditions, or you see a doctor, chiropractor or therapist regularly, with no end in sight.

  • HSAs are established through qualified HSA trustees, like banks or insurance companies. See if your own financial institution offers one. You don’t need to be an employee to qualify, but some companies offer them for their employees, and some employers contribute to workers’ HSAs.
  • To qualify, you need to be covered by a high-deductible health insurance plan. You can contribute a lump sum to your HSA at the start of the year or have it deducted from your paycheck.
  • In 2010, you can contribute $3,050 to your individual HSA or $6,150 to your family HSA. The limit increases to $4,050 for your individual HSA and $7,150 for your family FSA if you’re age 55 or older. Your funds can stay in your HSA from year to year until you use them up.
  • An HSA is “portable,” so you can keep it if you switch jobs or stop working.