Don't pass up 'free money' during open enrollment, says benefits expert—how to choose FSA and HSA contributions

If you’re hoping to save money on medical costs next year, open enrollment is an important time to do it.

When you select coverage for the upcoming year, you may be given the option to contribute to a flexible spending account or a health savings account. Both accounts allow you to divert money from each paycheck into an account you can use to pay for out-of-pocket medical expenses. And contributions to both are exempt from income tax.

If you’re not familiar with how these work, you’re not alone. Only about 19% of Gen Z and millennial workers say they use such accounts and understand the benefits, according to a recent survey from human resources platform Justworks and the Harris Poll.

“Up to 81% are leaving free money on the table,” says David Feinberg, senior vice president of risk and insurance at Justworks.

Here’s how these accounts work, and how much money experts say you should consider putting in them.