HSA vs FSA for CPAP Users: Which is Better?

There’s no denying the numerous benefits of CPAP therapy for those with sleep apnea. But just thinking about the CPAP equipment and supplies you need to purchase for this treatment–the costs can quickly add up. To help you cover these expenses, your employer might offer these two popular financial options: a health savings account (HSA) and a flexible spending account (FSA).

In this guide, we’ll break down the benefits and disadvantages of FSA vs HSA and help you choose the most cost-effective option for your sleep therapy. 

Also known as a health spending account, a health savings account (HSA) allows you to put aside money before taxes for qualified medical expenses, like copayments and coinsurance. This option is also considered a high-deductible health plan savings account since it’s only available if you have an HSA-eligible HDHP.

Another tax-advantaged account, a flexible spending account (FSA) also lets you set aside pretax funds for qualified medical expenses. Unlike an HSA, you don’t have to be enrolled in a specific health insurance plan to set up an FSA. But you can only submit a claim to your FSA funds through your employer. 

These two accounts seem closely similar, especially since they’re both tax-advantaged and can help pay for CPAP supplies and other healthcare expenses (excluding premiums). But there are things that make one of these options better suited for your needs:

Investment Opportunity

Just like an individual retirement account (IRA), an HSA lets you invest in various financial products, including stocks, mutual funds, and bonds. The money in your HSA also earns interest.

After funding the account and selecting your investment, you won’t only save money–you’ll also have a way to grow it over time.

Eligibility

If you have a qualified HDHP, you can open an HSA even if you’re self-employed. But if you’re not enrolled in an HDHP, you can set up an FSA through your employer, regardless of your insurance plan. 

When to Use the Money

Unused HSA funds roll over to the following year, so you can spend them on your healthcare needs at any time. This flexibility lets you build savings (or invest them) over the years and use them whenever.

Contrary to its name, a flexible savings account is less flexible. It involves a use-it-or-lose-it policy, which means your account (along with all unspent funds) expires after a plan year ends, with a possible rollover limit or grace period.  

Account Ownership

An HSA is a portable account that you own. If you switch jobs or insurance plans, you still have access to your HSA funds.

For FSA holders, the situation is pretty much the opposite. Because FSAs are owned by the employer, you might not be able to take your FSA funds with you if you change jobs or health plans. 

Tax Benefits

Because an HSA and FSA are set up with pretax dollars, they both reduce your taxable income or the amount of your salary reported for tax purposes. The withdrawals for qualified medical expenses are also tax-free. 

In terms of tax benefits, the main difference between FSA vs HSA is that the interest and other earnings from the latter remain tax-free. Unlike an FSA, an HSA earns interest and lets you use your funds to purchase stocks and other assets–all without being taxed. 

Contribution Rules

While both HSA and FSA contributions can be made through payroll deductions, you have the option to set up direct deposits from your bank account to your HSA.

Their contribution limits also differ, which are set annually by the Internal Revenue Service (IRS). For 2023, the maximum contribution for an individual is $3,850 (HSA) or $3,050 (FSA). HSA holders who are aged 55 or older can make catch-up contributions or an additional $1,000 every year.

Another difference is that, unlike an HSA, an FSA doesn’t allow you to change the contribution amount you’ve chosen at the start of the year.  

With an HSA or FSA, you’ll have an easier time paying out-of-pocket for CPAP supplies. After purchasing, simply file a claim, and you can be reimbursed for your medical expenses. 

Apart from that, here are the benefits of both accounts:

Savings and Coverage

Because you’re funding your HSA or FSA with pretax dollars, you have a quick way to reduce your taxable wage and increase your tax savings. Plus, you can use the funds for qualified expenses your plan doesn’t cover and pay tax-free dollars on them, helping you save more.

Additional HSA Benefits

While an FSA is compatible with all types of health plans, an HSA offers more perks:

• Investment opportunities and tax-free earnings
• No time limit
• Can be set up independently or through an employer

Purchasing CPAP supplies using your HSA or FSA is as straightforward as using any health insurance plan. Here are some common methods of paying with either healthcare savings account:

1. Reimbursement – After buying equipment and supplies from RespShop or other suppliers, save all invoices and receipts related to your out-of-pocket CPAP expenses. Then, submit a reimbursement claim to your account provider online, with attached receipts. The funds will be transferred from your HSA or FSA to your bank account.

2. Debit card – If you have an HSA or FSA debit card, you can use it to directly purchase a CPAP machine, mask, CPAP tubing, and other sleep therapy items. The money will be automatically deducted from your account and electronically transferred to the CPAP supplier. 

3. Online payment or mobile app – If your HSA or FSA administrator offers online payment services, simply log into your account and use the platform to pay the CPAP supplier. 

4. Check – While this method isn’t common, you can write a check from your HSA or FSA account when purchasing CPAP supplies. 

As long as they’re prescribed by your doctor, most sleep therapy products count as HSA and FSA-eligible medical supplies. They include:

• CPAP machines
• CPAP masks
• Tubing
• Filters
• Replacement parts (e.g. headgear and mask cushion)
• CPAP cleaning supplies
• Accessories (e.g. chin straps, mask liners, and humidifiers)
• CPAP Batteries and software

Keep in mind that the IRS typically determines the eligibility of the medical expenses made using your HSA or FSA. Your employer, FSA administrator, or HSA custodian may also set certain guidelines on qualified expenses. That said, always check with these institutions to ensure your purchases are covered.

As with any kind of financial plan, making the most of your HSA or FSA requires the right strategy. Consider these money-saving ways to spend your funds from these accounts:

Plan Ahead

How much are you paying for CPAP replacement parts and other medical expenses each year? Try to list all your annual healthcare needs, make an estimate, and contribute accordingly. 

Planning the amount of money to put into your account will be especially helpful when you need to spend all your FSA funds before they expire.  

Monitor Your Account Balance

Budgeting will only work if you’re consistent in keeping track of your available funds. So make it a point to regularly review your HSA or FSA balance to see how much money you can and should spend. 

Compare Prices and Use Discounts

Instead of buying from the first CPAP shop you find, consider visiting other stores and checking which offers the best prices. That way, you can ensure you’re truly saving money on your sleep therapy equipment. 

Here on RespShop, we carry a vast array of CPAP equipment and oxygen supplies at the lowest prices possible. We also hold occasional sitewide sales and offer daily deals on sleep apnea products. 

Organize Your Paperwork

Keeping all your prescriptions and records of CPAP-related purchases can help you better manage your FSA or HSA funds. Your HSA or FSA provider or even the IRS might need these documents for reimbursement and auditing purposes. 

Both a health savings account and a flexible spending account involve pretax contributions and tax-free withdrawals, helping you manage out-of-pocket sleep therapy expenses. But when choosing between FSA vs HSA, you have to consider your needs and preferences.

If you have an HDHP, you might want an HSA. HSA funds can grow through investments. Plus, they don’t expire, giving you better flexibility in spending them. 

If you’re not qualified to enroll in an HSA, an FSA is the next best choice. Because the funds are use-it-or-lose-it, this account can be helpful for those with regular medical expenses throughout the year–like CPAP users who need to regularly replace masks, parts, and accessories. 

Planning to shop for CPAP supplies on RespShop? We can help you reimburse your purchases or go through the purchasing process with your HSA or FSA. Use one of the methods below to get in touch with the RespShop medical team and save on CPAP equipment!