6Health Savings Accounts Versus Flexible Spending Accounts
A health savings account and a flexible spending account are quite similar. However, there are some major differences. Regarding the amount of money to roll over each year, a health savings account can rollover the whole unspent balance. On the other hand, a flexible spending account can only rollover a maximum of $550 per year. Another difference is that you can take money from a flexible spending account, while the money in a health savings account is your possession. An important thing to keep in mind is that you cannot have both accounts at the same time. [8]
How Much Money Can You Deposit or Withdraw From a Health Savings Account?
There are contribution limits for health savings accounts. In recent years, individuals cannot deposit more than $3,600 per year, while families cannot deposit more than $7,200 each year. Once you are eligible for Medicare, it is impossible to put money into this account. However, you may deposit up to $1,000 in excess of the maximum to cover the healthcare expenses after retirement. You can withdraw money from health savings account for nonmedical costs as long as you are below 65 years old. However, there will be income taxes and a penalty of 20 percent. If you withdraw after 65 years old, there will be no penalty, but you have to pay taxes. [9]
