Both Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) let you save pre-tax dollars for medical expenses. But they work very differently.
Quick Comparison
| Feature | HSA | FSA |
|---|---|---|
| Requires HDHP? | Yes | No |
| Contribution Limit (2026) | $4,400 / $8,750 | $3,400 (IRS annual limit) |
| Funds Roll Over? | Yes, forever | Limited (up to $680) or use-it-or-lose-it |
| Portable When You Leave Job? | Yes, you own it | No, you lose unused funds |
| Can Invest Funds? | Yes | No |
| Employer Contributions | Allowed | Allowed |
| Who Owns the Account? | You | Your employer |
Choose an HSA If...
- You're generally healthy and don't expect high medical costs
- You want to invest for long-term growth
- You value portability and flexibility
- You can afford to pay some expenses out-of-pocket now to let your HSA grow
- You're thinking about retirement healthcare costs
Choose an FSA If...
- You don't qualify for an HDHP (or prefer lower deductibles)
- You have predictable annual medical expenses
- You want lower payroll deductions (no HDHP premiums)
- You'd rather spend the tax savings now than save for later
Can You Have Both?
Limited-Purpose FSA (LPFSA): If you have an HSA, you can also have an LPFSA that covers only dental and vision expenses. This lets you maximize both accounts.
Dependent Care FSA: This is a separate account for childcare expenses and doesn't affect your HSA eligibility.
The Long-Term Math
Over a 20-year career, the HSA's ability to invest and roll over funds can result in significantly more savings:
- FSA approach: Use $3,000/year for expenses → $0 accumulated
- HSA approach: Invest $3,000/year at 7% return → ~$130,000+ accumulated
The catch? You need to be able to pay some medical expenses out-of-pocket to let your HSA grow.