Luis Pazos 
It’s open enrollment season, and like many, you might be figuring out your health insurance for the coming year. Besides picking the right coverage, you need to decide on the best health savings plan for your needs. Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs), and Flexible Spending Accounts (FSAs) are becoming more popular, especially among employers with younger, healthier workforces. Many companies now offer these accounts instead of traditional HMOs or PPOs.
An HSA is a tax-exempt savings account for healthcare expenses. Unlike other savings accounts, any money you don’t spend rolls over to the next year. You’re usually enrolled in a High Deductible Health Plan (HDHP), which covers major healthcare costs like preventive care, maternity care, and pediatric care. HSAs are popular because they come with low premiums. Instead of paying high premiums upfront, you save money in your healthcare expense account. For 2024, individuals can contribute up to $4,150 annually, and families up to $8,300. Unspent money grows tax-deferred, and distributions for medical expenses are tax-free. You can also invest HSA assets, and if you’re 65 or older, you can withdraw money for any reason without penalty.
HRAs are similar but the money is owned by your employer and reverts to them if you leave your job. For 2023, the maximum contribution is $2,100. FSAs let you use pre-tax dollars from your salary for medical expenses, either for yourself or a dependent. For 2024, the maximum contribution is $3,200, with an option to carry over $610 if the plan allows. However, FSAs are usually "use it or lose it," meaning any remaining money at the end of the year is forfeited.
Medi-Share is a newer alternative, where members pay monthly contributions into a savings account and request money to cover medical bills. Although there’s an out-of-pocket requirement before you can request assistance, it’s often more affordable than traditional insurance.
If your employer doesn’t offer an HSA, you’ll need to find one yourself, especially if you have a high-deductible plan. Shop around to compare fees, investment options, and how you can access your money. For example, Lively HSA has no monthly fees and minimal additional fees, HSA Bank charges $2.50 a month (waived for balances over $5,000), and Health Savings Administrators has a $45 annual fee but offers various investment options.
Choosing the right health savings plan during open enrollment is key. HSAs, HRAs, and FSAs each have distinct benefits, with HSAs offering tax-exempt savings with HDHPs, HRAs being employer-funded, and FSAs providing pre-tax savings with a "use it or lose it" policy. Medi-Share offers a cost-sharing model as an alternative. Consulting with a financial or insurance professional can help make the best choice for your situation.
