There are three common types of savings account plans employees choose from, depending on what’s offered under their employer’s benefit plan. They are:
- Flexible Spending Account (FSA)
- Health Savings Account (HSA)
- Health Reimbursement Account (HRA)
Although they each have their own unique benefits, they are all alike in that they are tax-advantaged. In plain English, tax-advantaged simply means that the money you and your employer contributes to the account is deposited before taxes are taken out. This, in turn, lowers your taxable income and increases your take home pay.
Why Proper Planning is Key
Choosing the right plan will ultimately come down to your ability to predict any medical expenses you may have before you enroll in a plan and figuring out how much each plan would cost you over the plan year.
Decisions like whether or not you are getting married, changing careers or starting a family will all affect which plan option is best for you. Planning these major life events ahead of time will allow you to make sure you have the best plan each year, and by doing this, you can more accurately estimate what your medical expenses for the upcoming plan year.
With proper planning and education, you can choose a health plan and savings option that is right for you so you won’t have to worry about getting hit with an unexpected medical emergency.
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