Greensboro, NC -- You're going to spend money on doctor visits and medicines. It's great if you can do that and get a tax break too.
FSA/Flexible Spending Account: this is tax-exempt money you put away. With FSAs you have a "use it or lose it" provision. Which means you could be scheduling dental and vision exams or surgeries at the end of the year just to take advantage of the money you put in.
HSA/Health Spending Account: this is tax-exempt money you put into a savings accoun and you can carry it over year to year.
Financial Expert Matt Logan of Matt Logan Inc. , says don't just do it blindly. "They can be great parts of your budget to help plan for medical expenses if used correctly. These are the rules I tell people for using these accounts: With both accounts, I recommend maxing out all of your retirement accounts prior to funding them."
Logan's rules also include a realistic look at what the plan covers. "With FSAs especially you should take a realistic look at what the plan covers and what you anticipate your expenses to be that year. Your contributions to your FSA should be reviewed annually and adjusted for upcoming medical expenses such as the birth of a child or a needed surgery."
With the HSA's and the ever rising costs of medical expenses, Logan says ,"this is a great tool to build up funds for medical expenses during retirement as they will be a larger part of your budget as you age."
Another added benefit of an HSA plan is the high deductible health coverage associated with these accounts is often much more affordable on an annual basis than a traditional plan and it could be a great tool to lower expenses for your family.
Logan says whichever one you choose, "As with everything associated with healthcare these days, all of this could change tomorrow, so stay on top of it and make sure you are making the best financial decisions for your family."