Pre-tax savings benefits like flexible spending and health saving accounts (better known as FSAs and HSAs respectively) can help workers pay for out-of-pocket medical expenses without breaking the bank. But a lot of workers are not fully taking advantage of these benefits.
FSAs are an employer-provided benefit where employees contribute a certain amount of their paycheck to the account each pay cycle — the employee does not have to pay taxes on the money in this account, nor do they need a health plan to sign up. The money in this account must be used by either the December 31 deadline or the extended deadline of March 15, which is only provided by some employers as a grace period. By contrast, an HSA must be paired with a high-deductible health plan. However, the money can be rolled over each year, tax-free, even if the employee switches employers.
