HSA vs FSA: What's the Difference?

HSAs and FSAs both let you set aside pre-tax money for medical expenses. They sound similar but work very differently. The biggest distinctions: HSA funds roll over indefinitely and you own them even if you change jobs. FSA funds mostly expire at the end of the year and stay with your employer.

HSA (Health Savings Account)

You need a High Deductible Health Plan (HDHP) to open an HSA. For 2026, that means a minimum deductible of $1,700 (individual) or $3,400 (family). Contribution limits: $4,400 individual, $8,750 family, plus $1,000 catch-up if you're 55 or older. The money is yours. It rolls over every year, earns interest or investment returns, and goes with you if you switch jobs. The triple tax advantage is unique: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.

FSA (Flexible Spending Account)

FSAs don't require a specific plan type. Any employer health plan works. The 2026 limit is $3,400 per employee. Contributions are pre-tax, reducing your taxable income. The catch: most FSA funds must be used within the plan year. Employers can offer either a $680 carryover into the next year or a 2.5-month grace period, but not both, and many offer neither. If you leave your job, you generally lose unspent FSA money.

Key Differences

Rollover: HSA rolls over forever. FSA mostly expires. Portability: HSA is yours. FSA stays with the employer. Eligibility: HSA requires an HDHP. FSA works with any plan. Investment: HSA can be invested like a retirement account. FSA cannot. Tax benefit: HSA has triple tax advantage. FSA has pre-tax contributions only. Limit: HSA $4,400/$8,750 (2026). FSA $3,400 (2026).

Can You Have Both?

Generally, no. Having a general-purpose FSA makes you ineligible for HSA contributions. But there's a workaround: a limited-purpose FSA that covers only dental and vision expenses is compatible with an HSA. If your employer offers one, you can use both.

Which Should You Pick?

If you have an HDHP and want long-term tax-advantaged savings, choose an HSA. If you have a traditional plan and know roughly what you'll spend on medical expenses this year, an FSA can save you money on taxes. If you're unsure how much you'll spend, an HSA is safer because you won't lose unspent money.