FSA vs HSA: Which Health Savings Account Is Right for You?
Compare FSA and HSA accounts for healthcare savings. Learn the key differences in contribution limits, rollover rules, eligibility, and tax benefits.
FSA vs HSA: What's the Difference?
Both FSAs (Flexible Spending Accounts) and HSAs (Health Savings Accounts) let you save pre-tax money for healthcare expenses. However, they have important differences in eligibility, contribution limits, rollover rules, and ownership. Understanding these differences helps you choose the right account and maximize your healthcare savings.
Health Savings Account (HSA) Overview
An HSA is a tax-advantaged savings account for people with high-deductible health plans (HDHPs). HSAs offer triple tax benefits: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.
- Must have an HDHP (min $1,650 individual / $3,300 family deductible for 2026)
- 2026 contribution limits: $4,300 individual / $8,550 family
- $1,000 catch-up contribution if 55+
- Funds roll over indefinitely—no "use it or lose it"
- You own the account; it stays with you if you change jobs
- Can invest funds for long-term growth
- Can use for retirement (non-medical withdrawals after 65 taxed like IRA)
Flexible Spending Account (FSA) Overview
An FSA is an employer-sponsored account that lets you set aside pre-tax money for healthcare expenses. FSAs are available with any health plan but have stricter rules than HSAs.
- Available with any health plan (not just HDHPs)
- 2026 contribution limit: $3,200 (set by employer, up to IRS max)
- Use-it-or-lose-it: Funds generally expire at year-end
- Limited rollover: Employer may allow $640 rollover OR 2.5-month grace period
- Account owned by employer; forfeit unused funds if you leave
- Cannot invest funds—no growth potential
- Full annual election available day 1 (don't have to wait for contributions)
Side-by-Side Comparison
Here's how FSAs and HSAs compare on key features:
- Eligibility: HSA requires HDHP; FSA available with any plan
- 2026 contribution limit: HSA $4,300/$8,550; FSA $3,200
- Rollover: HSA unlimited; FSA limited ($640) or forfeited
- Ownership: HSA is yours forever; FSA tied to employer
- Investment: HSA can be invested; FSA cannot
- Funds access: HSA limited to contributions made; FSA full amount day 1
- Tax benefits: Both pre-tax contributions and tax-free qualified withdrawals
Which Should You Choose?
Your choice depends on your health plan, healthcare needs, and financial goals. Choose an HSA if you have an HDHP and want to build long-term healthcare savings or a retirement supplement. Choose an FSA if you don't qualify for an HSA, want the full balance available immediately, or prefer a lower-deductible health plan.
- Choose HSA if: You have an HDHP, want funds to roll over, or want investment growth
- Choose FSA if: You need full funds immediately, don't have an HDHP, or have predictable expenses
- Both can be used for: Medical, dental, vision, prescriptions, and many OTC items
- Consider a Limited FSA: If you have an HSA, you may also have a limited FSA for dental/vision only
What Expenses Are Eligible?
Both FSAs and HSAs can be used for the same IRS-qualified medical expenses:
- Doctor visits, hospital stays, surgery
- Prescription medications
- Dental care: cleanings, fillings, crowns, braces
- Vision: exams, glasses, contacts, LASIK
- Mental health services
- Over-the-counter medications (since 2020)
- Medical equipment and supplies
- Some insurance premiums (HSA only, with restrictions)
Frequently Asked Questions
What is the difference between an FSA and HSA?
The main differences are: HSAs require a high-deductible health plan while FSAs work with any plan; HSA funds roll over forever while FSAs mostly use-it-or-lose-it; you own your HSA while your employer owns the FSA; and HSAs can be invested while FSAs cannot.
Can I have both an FSA and HSA?
Generally no, you cannot have a traditional healthcare FSA and an HSA simultaneously. However, you can have an HSA with a "limited purpose FSA" that only covers dental and vision expenses, or a "post-deductible FSA" that kicks in after you meet your deductible.
What happens to my FSA if I leave my job?
Unlike HSAs, FSAs are owned by your employer. If you leave your job, you typically forfeit any unused FSA funds. Some employers offer COBRA continuation for FSAs, but you'd pay the full contribution plus administrative fees.
Do HSA funds expire?
No. HSA funds never expire and roll over year after year indefinitely. This is one of the biggest advantages over FSAs. You can build up significant healthcare savings over time.
What is the HSA contribution limit for 2026?
For 2026, HSA contribution limits are $4,300 for individual coverage and $8,550 for family coverage. If you're 55 or older, you can contribute an additional $1,000 catch-up contribution.
Can I use FSA or HSA funds for dental and vision?
Yes. Both FSAs and HSAs can be used for dental expenses (cleanings, fillings, braces, etc.) and vision expenses (exams, glasses, contacts, LASIK). These are considered qualified medical expenses by the IRS.
Have FSA or HSA Questions?
Upload your medical bills and we'll help you understand which expenses are eligible and how to maximize your tax-advantaged healthcare dollars.
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