Employee benefits go beyond your paycheck. They provide tools to help you manage healthcare costs, save for future needs and support your family. Among the most valuable benefits are tax-advantaged accounts that reduce out-of-pocket expenses and maximize your income. Let’s explore the most common options and how they work.
Health Savings Account (HSA)
An HSA is available to employees enrolled in a high-deductible health plan (HDHP). It allows you to set aside pre-tax dollars for qualified medical expenses such as doctor visits, prescriptions and even dental or vision care. HSAs are unique because the funds roll over year-to-year and remain yours even if you change jobs. Contributions, growth and withdrawals for eligible expenses are all tax-free, making HSAs a powerful long-term savings tool.
Pre-Tax Dollars: Money set aside in an HSA or FSA before taxes, lowers your taxable income to reduce what you owe.
Flexible Spending Account (FSA)
FSAs also let you use pre-tax dollars for healthcare costs, but they differ from HSAs in two key ways: funds generally must be used within the plan year, and the account does not follow you if you leave your employer. FSAs can cover medical, dental and vision expenses, and some plans offer a limited rollover option or grace period.
Dependent Care FSA
If you have children or dependents who require care while you work, a Dependent Care FSA can be a game-changer. This account allows you to set aside pre-tax dollars for eligible expenses such as daycare, preschool, summer camps and even elder care. By reducing your taxable income, you save money while covering essential family needs. For 2026, contribution limits and eligibility rules follow IRS guidelines, so it’s important to review your employer’s plan details.
Why These Accounts Matter
Tax-advantaged accounts like HSAs and FSAs help you manage healthcare and family expenses efficiently. They not only lower your taxable income but also provide flexibility and peace of mind. When planning your benefits, consider your family’s needs, healthcare usage, and budget to choose the right combination of accounts.
Employee benefits are designed to support your health and financial well-being. Understanding how these accounts work ensures you make the most of what’s available… turning everyday expenses into smart savings opportunities.
Sources:
IRS – Health Savings Accounts and Other Tax-Favored Health Plans
IRS – Flexible Spending Arrangements
Healthcare.gov – Health Savings Account (HSA)
IRS – Dependent Care Assistance Program
SHRM – Understanding FSAs and HSAs
