Pay for it pre-tax
Most spending accounts let you choose how much money you want to set aside for health care, child care, and even commuter expenses. Then, that money can be taken out of your paycheck before taxes. This lowers your total income so you pay less income tax.
Spending Account Types
Each spending account helps you save in a different way. Ask your employer about what kinds of spending accounts are available to you and keep exploring to learn more about each one.
Spending Account Comparison
HSA |
HRA |
FSA |
|
|---|---|---|---|
|
Pay for deductibles/copays/coinsurance |
Yes |
Yes |
Yes |
|
Pay for dental/vision/prescription expenses |
Yes |
Yes |
Yes |
|
Pay for dependent care |
No |
No |
Yes |
|
Account owned by |
You |
Employer |
Employer |
|
Invest money for future expenses |
Yes |
No |
No |
|
Funded by |
You ** |
Employer |
You** |
|
You are required to have a Qualified High-Deductible Health Plan |
Yes |
No |
No |
|
Money is transferable if you change jobs/change plans/retire |
Yes |
No |
No |
|
Can reduce your taxable income |
Yes |
No |
Yes |
|
Debit card available |
Yes |
Yes |
Yes |
*This may depend on whether your employer offers this option.
**In some cases, your employer may contribute. The IRS sets different limits on contributions to HSAs and FSAs.
Spending Account Comparison Video
Most spending accounts let you choose how much money you want to set aside for health care, child care, and even commuter expenses. Then, that money can be taken out of your paycheck before taxes. This lowers your total income so you pay less income tax.
