HSA vs FSA - Can you tell the difference?



A Health Savings Accounts (HSA) and a Flexible Spending Account (FSA) are completely different, yet are commonly confused. Health Savings Account (HSA)

  • A Health Savings Account is a popular type of tax advantaged medical savings account available to individuals who are covered under a qualified (HSA eligible) high deductible health plan. They are available under both individual and group health plans.

  • Health Savings Accounts offer an attractive way to help fund your health plan/health care out of pocket expenses.

  • HSA’s are triple tax advantaged as: 1) Contributions, 2) Interest and investment gains, and 3) Distributions are all tax free.

  • HSA’s are personal and portable. The account and all balances are yours for life. There is no use it or lose it.

  • HSA’s are designed to be able to serve as a meaningful retirement component.

  • 2022 Contribution limits are $3650 for an individual, $7,300 for a family, and an additional $1000 for anyone age 55 and older.

Flexible Spending Account (FSA)

  • A Flexible Spending Account (FSA) is a special account with your employer that you put money into that is used to pay for copayments, deductibles, some drugs, and certain other health care costs.

  • The 2022 FSA contribution limit is $2,850. This means you don’t pay taxes on this money, so you’ll save an amount equal to the taxes you would have paid on the money you set aside.

  • Flexible Spending Accounts are only available under employer sponsored group health plans.

  • Your FSA works by reimbursing you for proof of medical and dental expenses and a statement that it has not been covered by your plan.

  • Unused monies that are not used for reimbursement during the year are forfeited (i.e., use it or lose it).

  • FSA’s do not offer any investment opportunity and are plan year vehicles only.

  • FSA’s provide short term tax savings only.

  • FSA’s are employer owned.

  • FSA’s are available to be used with any health plan.

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