Reply #39: No, HSAs and flexible spending accounts are two different things

[LondonReign2]

Section 125 Flexible Spending accounts have been around since the 80's. They allow you to put pre-tax deductions into an account and then be reimbursed for health care expenses throughout the year such as co-pays, prescription costs, and even over-the-counter medications. They are actually a pretty good deal since you are not taxed on this money; the key is that you need to use it all within the plan year (actually under new regulations by March 15th)or you will forfeit any unused contributions.

Health Savings Accounts are another matter. They truly amount to another tax avoidance vehicle for the wealthy, since only the wealthy can afford to put money into these accounts and then pay medical expenses out-of-pocket, allowing these accounts to grow tax free. You are strictly limited as to how much you can put into these accounts, so one significant illness of injury will wipe out your entire account.