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VERIFY: Do HSA funds expire or roll over to the next year?

With the end of the year just a few weeks away, it's time to get your finances ready for the New Year. So do you need to spend all the money in your HSA account?

CHARLOTTE, N.C. — With the end of the year just a few weeks away, it's time to get your finances ready for the new year, and that includes taking advantage of benefits before they expire on Dec. 31. 

A popular option for some people is an HSA, or a health savings account. A health savings account is a special savings account that lets a person set aside pre-tax dollars for certain health expenses. It's similar to a flex spending account, known as an FSA. 

Though the two acronyms are only one letter apart and sound the same, there is an important distinction that comes around every December. 

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THE QUESTION: 

Do you have to spend all the money in your health savings account by the end of the year? 

OUR SOURCES:

THE ANSWER: 

No, you do not have to spend your health savings account money by the end of the year, but you do need to use your FSA money by the end of the planned year. 

WHAT WE FOUND: 

First, let's look at the difference between an HSA and FSA. According to Healthcare.gov, a health savings account is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. 

"So just like a retirement account, but it's going to be used for medical expenses," Henry said. 

Meanwhile, a flex saving account is a special account you put money into that you use to pay for certain out-of-pocket health care costs. 

"Flex spending accounts have a little bit more variety of what it can be used on, unlike an HSA, which is typically medical expenses," Henry said. 

Henry said generally, a person must use the money in an FSA within the plan year. However, Healthcare.gov states your employer may offer an extra grace period to use those funds. 

"You don't want to lose money, so you have to go spend it, and you will find something in there that you can spend it on," Henry said. 

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There are various things you can spend your FSA money on, including dental care, eye care, health screenings, and more. 

Meanwhile, you can keep your HSA account as long as you need it, even if you transfer to another company, and you can use the money on your family's medical expenses. 

"The HSA is where you grow the money and you do not spend it each year," Henry said. "You can actually leave that employer and take the HSA with you, and it's a health savings account. It stays there for the whole time."

Contact Meghan Bragg at mbragg@wcnc.com and follow her on FacebookTwitter and Instagram.

VERIFY is dedicated to helping the public distinguish between true and false information. The VERIFY team, with help from questions submitted by the audience, tracks the spread of stories or claims that need clarification or correction. Have something you want VERIFIED? Text us at 704-329-3600 or visit /verify.

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