Imagine that a friend tells you her employer has given her the choice of health insurance plans. She must choose between a PPO insurance plan with a flexible spending account (FSA) that has a limit of $2500 OR high-deductible plan with a health savings account (HSA) that her employer will contribute $1000 to. Your friend has a spouse and two children that will be on the plan. Her premiums on the high-deductible plan will be $1000 less per year than on the other plan. However, the deductible for the regular PPO plan is $1000 per individual and $3000 family, and on the high-deductible plan is $2000 individual and $4000 family.

Explain which plan you would tell your friend to choose and why.

Explain which you would you rather havea flexible spending account or health savings account, and why.

If you were an employer, would you offer both, or only one? Describe the benefits of your choice.