Health savings accounts (HSAs) and flexible spending accounts (FSAs) both allow you to set aside pretax dollars to spend on expenses. Both account types offer benefits and drawbacks. Understanding these can help you choose the best plan for you.
Health savings accounts (HSAs) and flexible spending accounts (FSAs) are two different savings account choices that can be paired with health insurance plans.
Both plans allow you to set aside tax-free money for medical expenses and can help you save money. However, the plans aren’t the same.
There are significant differences in important details like the contribution limits, associated health insurance plans, and time frames for spending the funds. Knowing these details can help you determine which plan is right for you.
With a flexible spending account (FSA), you set aside pretax earnings to cover eligible medical expenses, which lowers your costs by about 30%.
In 2025, you can contribute up to $3,300. Your employer may also add funds, but you can’t take the account with you if you change jobs. Most FSAs require you to spend the money within the plan year, although some give you a short grace period or let you carry over up to $660.
On the other hand, a health savings account (HSA) is available only if you have a high-deductible health plan (HDHP), which gives you lower premiums but higher out-of-pocket costs.
In 2025, you can contribute up to $4,300 as an individual or $8,550 as a family. Your contributions are tax-free, your balance rolls over year to year, and many HSAs let you earn tax-free interest or investment income so your savings can grow.
HSA vs FSA summary chart
Here’s a summary of the key differences between an HSA and an FSA:
| HSA | FSA |
|---|---|
| money carries from year to year, but is tied to a high-deductible health plan | money doesn’t roll over from year to year |
| belongs to you even if you leave your job | stays with your employer if you leave your job |
| maximum $4,300 as an individual or $8,550 as a family in 2025 | maximum $3,300 for an individual in 2025, but a spouse can have their own FSA with an additional $3,300 |
| can change the contribution amount at any time throughout the year | can change contribution amount only during open enrollment |
| contributions to the account and any growth earnings or interest are not subject to income tax | contributions to the account and any growth earnings or interest are not subject to income tax |
The savings plan you choose depends on your situation. What works well for one person may not be the right fit for another. For instance, an FSA can help if you need access to medical funds right away. Once you decide how much to contribute each month, you can use the full annual amount for reimbursement. Unlike an HSA, you can have other health insurance or even Medicaid and still use an FSA.
However, you must spend the money within the year or risk losing it. Your account is also tied to your employer, so you could lose the funds if you switch jobs. FSAs have lower annual limits than HSAs, and you cannot invest the balance to grow over time.
An HSA also offers long-term advantages. For example, you can keep your funds if you change jobs, your balance rolls over each year, and many accounts allow you to earn tax-free interest or investment income. But to open an HSA, you must enroll in a high-deductible health plan (HDHP), which means paying higher upfront costs before your insurance starts covering expenses.
In addition, contribution limits may not cover very large medical bills, and if you use the money for non-medical purposes before age 65, you’ll owe both taxes and penalties. You also need to keep receipts to prove qualified spending, and if you invest your balance, you could lose money due to market shifts and may incur penalties.
Tips for choosing an HSA vs an FSA
The right plan for you is one that meets your healthcare needs and budget. Both HSAs and FSAs have advantages and disadvantages.
Choose an HSA if you:
- Have few medical expenses and can handle a high deductible plan.
- Plan to move or change jobs as the account stays with you.
- Want to build long-term savings, since funds roll over every year.
Choose an FSA if you:
- Have regular medical expenses for yourself, your spouse, or dependents.
- Get employer contributions that match what you put in.
- Have access to a dependent care FSA to help pay for child or adult care.
Yes. You can use either an HSA or an FSA account for dental expenses. However, only certain types of dental expenses may qualify.
Companies may choose to offer only an FSA because it’s cheaper, easier to administer, and can be paired with any health plan, making it accessible to all employees. Others may choose only an HSA if they primarily offer high-deductible health plans and want to encourage long-term savings while lowering premium costs. Some companies offer both to provide flexibility
Yes. The maximum contributions for FSAs and HSAs change each year to adjust to inflation and the cost of living. The minimum deductible required for a health insurance plan to qualify as a high deductible health plan also changes each year.
FSAs and HSAs are both healthcare accounts that can help you save money on medical expenses. You can use these accounts to set aside pre-tax dollars. There are benefits and risks to either type of account.
The right account for you depends on your circumstances.
For instance, HSAs might not be a good fit for people with chronic health conditions since they need to be paired with high-deductible health plans. FSAs might not be a good fit for people who are planning to move or change jobs in the next few years, since FSAs are tied to your employer.
Looking at your budget, health, and plans is a great way to decide which account is best for you.