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Your Guide to Using HSA/FSA Funds for Family Members


An HSA (health savings account) or FSA (flexible spending account) has many benefits. These accounts are used to pay out-of-pocket healthcare costs. To establish an HSA, you must have coverage with a high-deductible health insurance plan. The funds you put in the account are not taxed and will roll over into the next year if there is unused money at the end of the year. The funds in the account can pay for medical and dental care but cannot be used to pay health insurance premiums. The funds are accessible for your own medical and dental care, as well as qualified medical expenses for:

  • Your spouse
  • Your dependents
  • A qualifying dependent relative 
  • Uninsured members of your family

HSA or FSA? What is the Difference?

An HSA is a savings account you establish that provides some significant tax advantages. The money you contribute to the account is on a pre-tax basis, reducing your taxable income. You can use the account to pay for your deductibles and copays on medical and dental care. These accounts have the added benefit of paying for the medical and dental costs for a qualified spouse or dependent unless they are reimbursed by another source. As the owner of the HSA, you must authorize each added individual to use your account, with a debit card issued in their names. Your HSA account belongs to you and is not tied to your employment.

An FSA account is established through your employer. You can contribute up to a maximum limit each year, reducing your taxable income. The drawback of an FSA when compared to an HSA is that any funds more than $500 in your account will not roll over if unused at year-end. These accounts are not as flexible as an HSA and do not offer any benefit in a long-term financial plan. However, an FSA does provide tax benefits and the ability to pay high deductibles for medications, hospital costs, and dental treatments – and pay these costs for your spouse and dependents.

How to Open an HSA

To open an HSA, you must first be enrolled in a high deductible health plan, whether purchased yourself or a group health insurance plan offered by your employer. A high deductible health insurance plan is any health insurance with a deductible of at least $1,400 for a single covered person or $2,800 for the family. The application process is relatively simple. Go to your bank, and they will walk you through the process. Your banker can advise you about your options for investing the funds. You can contribute up to a certain amount every year, $3,550 for an individual and $7,100 for a family. If you are 55 or older, you can add $1,000 to your investment as a “catch-up.” 

If you have questions about an FSA or HSA, our knowledgeable local agents are here to help. Your employer may offer the benefit of contributing to your HSA or offer an FSA. In either case, if you have dependents, you need to ensure your account is set up correctly, and we can offer you expert advice.

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