HSAs, FSAs, and Rx Discount Cards

If you have been doing research into how to save money on your prescription drugs, you have likely come across three different tools: HSAs, FSAs, and prescription discount cards. Confused about which tools you can use when? Here is what you need to know:

Health Savings Accounts

A health savings account (HSA) is a special type of account designed to make healthcare expenses more affordable. The account holder contributes pre-tax dollars into the account. Withdrawals are not taxed as long as the money is used for qualified medical expenses. HSAs are portable, so if you gain an HSA from one job, you will be able to bring it with you when you leave that position. They also rollover, so if you don’t use up the full balance in a given year, the leftover money is still available the following year.

There are two important “catches.” First, these accounts are only available to people with high-deductible health insurance plans. And second, there is a limit to how much money you may add to the account each year.

Flexible Spending Accounts

A flexible spending account (FSA) is a similar but different type of savings account that also provides the account holder with specific tax advantages. Set up by an employer for an employee, it allows employees to contribute a portion of their regular earnings into the account to pay for qualified expenses, such as medical bills or dependent care expenses. These accounts are typically tied to a specific employer or benefits plan and sometimes balances must be used before the end of the year.

Prescription Discount Cards

Prescription discount cards are exactly what they sound like, a card that enables the user to pay a discounted rate for prescriptions at the pharmacy. All you have to do is download an Rx card or mobile app , and then show it at the pharmacy counter to receive a lower price. There are no fees, and you can sign up regardless of whether you have health insurance . FamilyWize card users save an average of 45 percent on their prescription drugs!

Can You Use a Discount Card with an HSA or FSA?

Yes! Discount prescription cards simply work like coupons when used in combination with an HSA or FSA. At the pharmacy counter, show your prescription discount card to receive the discounted price. Then, when it is time to pay, simply hand over your HSA or FSA card.

Sometimes, if you have prescription drug coverage, the reduced price offered by a prescription discount card may be lower than your insurance co-pay. If that is the case and you use a discount Rx card to purchase your medication, you can still submit your receipt to your insurer, regardless of whether you are paying with HSA or FSA funds. Assuming the drug is covered by your health plan, your insurance provider will count the discounted prescription price towards your deductible.

Still have questions? Ask at your local pharmacy. They will be able to help you determine what options might work best for your personal situation.