Question
Personal finance unit 3 lesson 7 Consumption and Benefits Unit Test
Which is true of a flexible spending account but not a health savings account?
Which is true of a flexible spending account but not a health savings account?
Answers
GPT-4o mini
A key difference between a flexible spending account (FSA) and a health savings account (HSA) is that contributions to an FSA are generally "use-it-or-lose-it." This means that if you do not use the funds in your FSA by the end of the plan year (or any applicable grace period), you will forfeit those funds.
In contrast, funds in an HSA can roll over from year to year and remain available for future medical expenses. Additionally, HSAs are typically available only to individuals enrolled in high-deductible health plans (HDHPs), whereas FSAs can be offered with various types of health insurance plans.
So, to summarize, the key statement that is true of a flexible spending account but not a health savings account is that FSA funds typically do not roll over at the end of the year and must be used within that timeframe.
In contrast, funds in an HSA can roll over from year to year and remain available for future medical expenses. Additionally, HSAs are typically available only to individuals enrolled in high-deductible health plans (HDHPs), whereas FSAs can be offered with various types of health insurance plans.
So, to summarize, the key statement that is true of a flexible spending account but not a health savings account is that FSA funds typically do not roll over at the end of the year and must be used within that timeframe.