People facing alcohol and drug addiction often need to find a treatment program that meets their recovery needs while staying within their budget.
There are many sources of funding available to help pay for treatment, such as health insurance and government grants. But you can also use an FSA or HSA account to pay for treatment.
What Are HSA And FSA Accounts?
HSA and FSA accounts are ways to use pre-tax income on healthcare expenses, lowering your out-of-pocket costs.
However, these two types of accounts work differently and are applied to different situations. Below is a breakdown of how the two accounts work.
What Is A Health Savings Account (HSA)?
An HSA is a savings account (or investment account) that you can create if your insurance policy is considered a high deductible health plan (HDHP).
In general, a deductible is the amount of money you must pay before your health insurance coverage begins.
HDHPs are $1,600 or more for an individual plan or $3,200 or more for a family plan. The cap for out-of-pocket expenses is $7,500 or $15,000 respectively.
The problem with HDHPs is, of course, that the high deductible means that you will have high out-of-pocket expenses. This is why an HSA is important.
You or your employer can contribute pre-tax income to your HSA, and you can use the money for medical-related expenses such as deductibles, coinsurance, or copayments.
You have direct access to your HSA and can spend from it like a normal account, provided you keep documentation of your medical expenses.
What Is A Flexible Spending Account (FSA)?
An FSA is similar to an HSA in that you or your employer can contribute pre-tax dollars to it, but there are some key differences.
An FSA is managed by your employer and works like a reimbursement account. Whereas with an HSA, you spend directly from the account, when you have an FSA, you submit a claim to the account through your employer and, if approved, get reimbursed.
FSAs are not intended for people with HDHPs or health insurance marketplace plans.
Like an HSA, you can use the money to pay for medical expenses such as deductibles, prescription medications, over-the-counter medications, and other expenses.
Neither HSAs nor FSAs can be used to pay for health insurance premiums, or the monthly cost of your insurance plan.
Using An FSA Or HSA To Pay For Addiction Treatment
If you or a loved one requires substance abuse treatment, there are ways to pay for it using an FSA or HSA.
If you have a high deductible plan, you could end up owning thousands of dollars for addiction treatment. An HSA allows you to use the money you have saved for these high deductibles.
An FSA can also be applied to your deductible. Other expenses may include medication if medication-assisted treatment (MAT) is part of your treatment program.
If you need more money in your FSA account to cover addiction treatment costs, your spouse can contribute to it, as well as your employer. The cap on the amount they can contribute is $3,050 a year.
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Published on September 25, 2023
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- HealthCare.gov - Health Savings Account (HSA)
- HealthCare.gov - People with coverage through a job
- National Institutes of Health (NIH): Office of Human Resources - The Difference Between A Flexible Spending Account (FSA) And A Health Savings Account (HSA)