HSA vs. FSA: Understanding your options

Healthcare expenses can add up quickly, and without a plan, those costs can feel overwhelming. That’s where health savings accounts (HSAs) and flexible spending accounts (FSAs) come in. Both are designed to help you set aside pretax dollars for eligible medical expenses, helping you save on taxes while preparing for healthcare costs throughout the year.

While they share a similar goal, HSAs and FSAs have important differences. Here’s a high-level look at the basics:

Health savings account (HSA)

An HSA is a tax-advantaged savings account available to individuals enrolled in a qualified high-deductible health plan (HDHP).

Key features

• Contributions are made pretax.
• Funds can be used for eligible medical expenses.
• Money rolls over year to year.
• The account is yours to keep, even if you change jobs or retire.
• Funds may be invested and grow over time.

Flexible spending account (FSA)

An FSA is also used to pay for eligible healthcare expenses, but it works a bit differently.

Key features

• Contributions are still made with pretax dollars.
• Funds can be used for eligible medical expenses.
• Funds do not typically roll over, making it a shorter-term plan.
• Typically tied to your employer’s plan — does NOT go with you.

An FSA can be a great option if you want immediate access to your full election amount at the start of the plan year.