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Most employees don't know difference between FSA, HSA: Survey

Posted On: Aug. 22, 2013 12:00 AM CST

Most employees don't know difference between FSA, HSA: Survey

Most employees don’t know the basic difference between health savings accounts and flexible spending accounts, according to a new survey.

Nearly 75% of those responding to a Fidelity Investments survey said HSAs were pretty much the same thing as FSAs or were unsure of how FSAs and HSAs differ.

The most significant difference is that contributions made to HSAs, which must be linked to high-deductible health care plans, can be rolled over to pay for succeeding years’ out-of-pocket health care expenses.

By contrast, under a decades-old Internal Revenue Service rule, unused FSA balances are forfeited if not used by the end of a plan year. In the case of employers that adopt a grace period, FSA balances that remain at the end of a plan year can be used to pay health care expenses incurred during the first two and a half months of the next year.

Another big difference — set by the health care reform law and which took effect this year, is the maximum annual contribution that can be made to an FSA is capped at $2,500.

By contrast, the maximum contribution that can be made to an HSA this year is $3,250 for employees with single coverage and $6,450 for employees with family coverage.

“It’s clear more can be done to educate employees on the numerous benefits of HSAs, from saving for current and long-term qualified medical expenses to factoring health care costs into retirement planning,” William Applegate, a Fidelity Investments vice president in Boston, said in a statement.

The survey, which was released Tuesday, of more than 1,800 adults, of which just over 300 were enrolled in a health care plan with an HSA, and another 300 who declined to enroll in the HSA-linked health care plan and instead opted for a more traditional health care plan.