Comparing HSA and FSA Plans

HSA vs. FSA Comparison

Feature	Health Savings Account (HSA)	Health Flexible Spending Account (FSA)
What is it?	An individual savings account for covered health care services and qualified medical expenses.	An account to help you pay for eligible medical expenses using pretax funds.
Eligibility	Must be in an HSA-compatible High-Deductible Health Plan (HDHP) and have no other health coverage.	Offered by employers; you sign up if your employer provides the option.
Ownership	You own the account. It stays with you regardless of employment.	Your employer owns the account, though the money is for your use.
Funding	You, your employer, family, or others can contribute.	Primarily you; your employer can also choose to contribute.
How is it funded?	Deposits can be made like a personal bank account or via pre-tax payroll deductions.	Your employer deducts pre-tax funds from each paycheck throughout the year.
Contribution Limits	Yes; annual limits are set by the IRS based on your insurance tier.	Yes; annual limits are set by the IRS and your employer.
Year-End Rollover	Yes. All unused funds stay in the account indefinitely, even into retirement.	Maybe. Employers may allow a limited "carryover" amount (IRS-capped) or a grace period.
Cashing Out	Yes, but non-medical withdrawals are subject to income tax plus a 20% penalty.	No.
Portability	Yes. You keep the account and the money if you leave your employer.	No. Your employer generally keeps any remaining funds if you leave.
Spending Timeline	You can spend funds once the HDHP is active and the account is open.	You can spend the full annual election on the first day of the plan year.
Tax Advantages	Triple Tax Advantage: No tax on deposits, growth/interest, or medical withdrawals. No Social Security tax on payroll deposits.	No federal, state, or Social Security taxes are paid on contributions or reimbursements.
Interest	Yes. Funds can earn interest or be invested depending on the bank.	No.
Eligible Expenses	Qualified medical, dental, and vision expenses defined under IRS Section 213(d).	Eligible medical, dental, and vision expenses defined by the IRS and your employer.
Non-Medical Use	After age 65, funds can be used for anything (taxed as income). Under 65, non-medical use incurs a 20% penalty.	No.
Other Accounts	Can be paired with a Limited-Purpose FSA or HRA (Dental/Vision only).	Can be paired with an HRA or a Dependent Care FSA (Daycare/Elder care).
COBRA Status	COBRA applies to the health plan, but not the HSA itself.	Yes. COBRA rights apply to the FSA.
Pay Premiums?	Yes. Can be used for COBRA or other specific plan premiums.	No.

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