F.S.A. vs. H.S.A.: What to Know About the Accounts That Pay Medical Costs – The New York Times

In some cases, it can take several weeks to transfer funds from one HSA to another, during which time the original account continues to charge monthly fees, the report said. It also mentioned consumer complaints about funds being lost during transfers from one bank to another.

Research firm Morningstar evaluated 10 HSA plans in October using criteria such as fees, savings rates and investment options. (The company looked only at accounts available directly to individuals, not those offered through employers, so details may vary.) Rated “High” overall for both spending and investing The only provider was Fidelity Investments. His HSA with the company had savings interest rates well above his 2%, while his competitors’ interest rates were less than 1%.

“This is a big drawback,” said Greg Carlson, senior manager research analyst at Morningstar.

Here are some questions and answers about health accounts:

Sarah Taylor, senior director of employee expense accounting at benefits consultancy WTW, suggests taking a closer look at your past medical expenses before deciding how much to contribute to your FSA. “That’s difficult for some people,” she says. However, you can come up with a reasonable number by looking at last year’s “Benefit Description,” a form that explains what treatment you received and what costs you covered. Was it abnormal because I had major surgery last year? In that case, we recommend donating a smaller amount. Many employers offer online tools to help you create a quote.

It also helps you know what you can spend your FSA money on. That way, if you find yourself with a balance left over at the end of the year, you can use the money to buy eligible over-the-counter items like painkillers or sunscreen. Helpful resources include: FSA storecontains an alphabetical online list of eligible and non-eligible items.

Spiegel said that while no one wants to part with their funds, the tax benefits of FSA contributions can give workers an advantage over not contributing. Suppose a hypothetical worker whose marginal tax rate (including federal, state, payroll, and local taxes) is 30% contributes his $1,500 to his FSA and realizes a tax savings of $450. The worker would benefit by participating even if the loss she repays to her employer is less than her $450.