What to Know About HSA and FSA Accounts
Understanding Tax-Advantaged Health Accounts
If you’re looking for ways to save on healthcare costs, two powerful tools to consider are the HSA (Health Savings Account) and FSA (Flexible Spending Account). These accounts let you use pre-tax dollars to pay for eligible medical expenses—but they work very differently.
Whether you get benefits through your job or purchase your own insurance, knowing how these accounts function can help you save money and plan ahead.
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| Choosing Between an HSA and FSA Account |
What Is an HSA?
An HSA (Health Savings Account) is a tax-advantaged account that helps people with high-deductible health plans (HDHPs) save for current and future healthcare costs.
- Contributions are tax-deductible
- Funds grow tax-free
- Withdrawals for qualified expenses are tax-free
- Money rolls over from year to year
- You keep the account even if you change jobs
💡 Try searching: 2025 HSA Contribution Limits
What Is an FSA?
An FSA (Flexible Spending Account) is another tax-free way to pay for healthcare costs, but it works differently.
- Funded through your employer
- Use-it-or-lose-it rule (limited rollover or grace period)
- Only available if your employer offers it
- Good for predictable annual expenses (prescriptions, copays, childcare if dependent care FSA)
💡 Try searching: Eligible FSA Expenses
Key Differences Between HSA and FSA
| Feature | HSA | FSA |
|---|---|---|
| Eligibility | Must have HDHP | Offered by employer |
| Rollover | Yes, unlimited | Limited rollover or grace period |
| Portability | You keep it if you leave your job | You lose it when you leave your job |
| Contribution Limits | Higher (check yearly IRS limits) | Lower (usually $3,050–$3,200) |
| Investment Option | Yes, often like a 401(k) | No investment feature |
Which One Is Right for You?
Choose HSA if: You have a high-deductible plan and want to save long-term. It acts like a “healthcare 401(k).”
Choose FSA if: You want to cover routine, short-term costs and your employer offers the benefit.
💡 Tip: You may be able to use both, if one is a dependent care FSA and the other is an HSA for medical costs.
Common Qualified Expenses
Both accounts can typically be used for:
- Doctor visits and copays
- Prescription medications
- Vision and dental care
- Mental health services
- First-aid supplies, thermometers, and more
💡 Try searching: HSA/FSA Eligible Products
FAQ
Q: Can I have both an HSA and FSA?
Yes, but only if the FSA is for dependent care or limited-purpose (dental/vision only).
Q: What happens to unused FSA money?
It usually expires at the end of the plan year unless your employer offers a small rollover or grace period.
Q: Can I invest HSA funds?
Yes—many providers let you invest your balance once you reach a minimum amount (like $1,000).
Q: Are over-the-counter drugs covered?
Yes, many are now eligible—especially after the CARES Act expansion.
Final Thoughts
HSA and FSA accounts are smart tools for managing your healthcare expenses with tax advantages.
By understanding how they work and choosing the right one for your needs, you can save hundreds—sometimes even thousands—every year.
Knowledge is your best asset when planning for medical expenses.
Start by reviewing your plan options and checking what qualifies for tax-free spending.
