Health Savings Accounts vs. Flexible Spending Accounts? Which is Better?

Funny piggybank standing on clipboard with documentWhat is the difference between a health savings account (HSA) and a flexible spending account (FSA)? Is one better than the other?

Both allow you to save money tax-free for out-of-pocket medical expenses such as prescription drugs, eye glasses, etc. and the money you save is not part of your taxable income. However, there are some key differences:

Flexible spending accounts:
Contributions to a flexible spending account are deducted from your paycheck, pre-tax, with a maximum individual contribution of $2,600 per year. If you do not spend all of the money in your FSA by the end of the year, you may lose the remaining balance. Because of this, you must estimate the amount you will need for the entire year, which can be hard to predict. An advantage of an FSA is that your full balance for the year will be available January 1st, even before the monthly contributions are made.

Health savings accounts:
A health savings account will allow you to store away more money than an FSA, and your unused funds will carry over year-to-year. You can also take your HSA with you if you leave your job, and enjoy tax-free withdrawals for qualified medical expenses (there are some penalties if funds are used for other purposes). The downside of this system is that in order to contribute to an HSA, you must have a high annual deductible (at least $1,300 for individual coverage). For a list of administrators, visit

The best option for you will depend on a few factors – if you are self-employed with a high insurance deductible, will be changing jobs, or have unpredictable health-care costs, then an HSA could be a good option. However, if you will be paying for more predictable costs like contact lenses and copays for regular medication, then an FSA might be the way to go. Ultimately, it comes down to your financial situation, health, and job status, as well as the plans that your company may offer.

(Adapted from Kiplinger’s Personal Finance Magazine, June 2017)

Turn Your Goals Into Reality

Goals blog photo.jpgYou can spend time trying to right the past…but more time will pass than you’ll get right.

Taking simple actions each day will right more wrongs and get you further ahead. By simply writing out three steps to achieve each goal, you will turn your goals into reality.

Do you know the steps?

Want to Make More Money?

"Jobs" on wooden block and magnifying glass on newspaper backgroundJob…that might not be the right word for it. Instead of thinking about it as another job, consider getting a second source or third source of income. I can see how this might be a weird idea. But, in the future, creating a second or third source of income is very possible even without disrupting your life.

Consider this – the wealthiest people in the world have an average of ten sources of income. Yet, the majority of middle class Americans have only one source of income. Do you see the discrepancy? Why do the rich get richer? Because they have more sources of income.

With the ability to market a product that you don’t manufacture or even keep an inventory of, making money has gotten easier. For example, just search “product drop shipping.” You’ll find many companies who manufacture a product and will sell it to you at wholesale prices, and in many cases, will even ship the product to the end customer. All you have to do is sell it.

If I have sparked your interest and you would like to learn more, contact me to set up a time to talk further about creating multiple sources of income.