is the fsa better than the hsa?

Q&A: Is the FSA better than the HSA?

Question

My wife and I are expecting a baby in June.  You made clear that an FSA is the better choice for someone who is anticipating a year filled with high medical expenses… but I didn’t understand exactly why.  Would you mind elaborating very briefly why the FSA is superior to the HSA in a year where we will be having a baby?

Answer

It all depends on the FEHB plan.  Remember, HDHP plans can save a person like $4k-$5 (sometimes more).  If you have an HDHP, and you run up a large medical bill you may end up coming out of pocket the entire $4k-$5k savings.  So it was a wash. Not so risky, but just a wash.   In such a year, if you have a super comprehensive plan with very low out-of-pocket exposure, then you may not have much out of pocket.    

But you’re right, if the non-HDHP was still going to cost you much out of pocket, then, doing the math, you actually might be better off with the HDHP/HSA.

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