Unexpected accidents can also be made less financially stressful when there’s money hiding in an FSA. The 2022 limit is $2,850 per year per employer, and funds should be used during the same calendar year in which cash is set aside for this purpose. Although some employers will allow a grace period or a certain amount of funds (a max of $570) to roll over to the next year, you may want to get creative about spending down any available FSA balance soon. RELATED: A Dependent Care FSA Can Help You Save Money on Childcare Costs—Here’s What to Know A health savings account, or HSA, she continues, “allows you to contribute a certain dollar amount each year to use specifically for eligible medical expenses. The money you contribute to an HSA is tax-deductible, and withdrawals are tax-free—as long as you use the funds for qualified medical expenses.” She adds that some employers will even contribute money to your HSA every year to help subsidize your out of pocket expenses. These two accounts might sound interchangeable when it comes to qualified medical expenses, but HSAs can also be used to invest and grow your money tax-free. “If you have a high-deductible health insurance plan, you may be eligible to contribute to a health savings account,” McCreary says. Before the year ends, take a look at whether you have an HSA, an FSA, or both. When in doubt, talk with a financial planner about how to use your HSA balance to reach larger financial goals, that is, if you have no immediate medical needs on the horizon. RELATED: Why An HSA Should Be Part of Your Retirement Plan
