Workplace Benefits

FSA vs. HSA: What’s the Difference?

3 min read
Jan 19, 2024

Depending on your health insurance plan and your employer, you may have access to a health savings account (HSA) or a flexible spending account (FSA). Both HSAs and FSAs are tax-free savings accounts meant to cover healthcare costs.

HSAs may provide a more flexible and portable option, but they’re only available with a high-deductible health plan (HDHP). Meanwhile, FSAs have more restrictions and are typically offered as an employee benefit.

Let’s dive a little deeper into what FSAs and HSAs are, how they work, and the differences between the two.

FSA vs. HSA: Key differences




Who’s eligible?

Employees at organizations that offer FSAs as an employee benefit

Individuals with a high deductible health plan who aren’t covered under any other health insurance coverage and who meet additional HSA requirements1

Who can contribute?

The account holder and their employer, if specified in the plan1

The account holder and their employer, and anyone else who wishes to contribute

What is the maximum contribution amount?

$3,200 in 20242

$4,150 for an individual and $8,300 for a family in 2024.3 Those who are 55+ can make an additional $1,000 “catch-up” contribution.

Does it earn interest?



Does the money roll over year-to-year?

Typically, no (but some plans allow unused funds to carry over up to a limit — e.g., a max of $640 in 2024)2


Is the account portable if you leave your job?



What is an FSA and how does it work?

An FSA, aka a health FSA, is a tax-advantaged savings account where money can be set aside through voluntary payroll deductions to help you pay for qualified medical costs.1 You can pay these costs via FSA debit card, through an online portal, or as reimbursements after submitting a claim and receipt.

FSA funds usually don’t roll over at the end of each year. However, some employers may offer a grace period or a carryover. If a grace period is provided, you'll have up to 2.5 months at the end of the plan year to use any unused FSA funds.1 Or in 2024, specific plans may allow you to carry over up to $640 of unused funds to the following plan year.2

Keep in mind that not all plans allow this. So if you don’t use all the funds by the year’s end, you’ll likely lose the balance. The same applies if you leave your job before the year ends.

Employees can contribute a maximum of $3,200 to their FSA in 2024.2

What is an HSA and how does it work?

An HSA is another type of savings account that lets you set aside money for eligible medical expenses on a tax-free basis.1 An HSA is designed to work in conjunction with an HDHP, which is typically characterized by its lower premiums and higher deductibles compared to traditional health insurance plans.4

HSA funds can roll over when the year ends, and they usually have higher contribution limits than FSAs.1 Like a traditional savings account, HSA funds earn interest on pre-tax money contributions and can even be invested, making HSAs an additional type of savings vehicle.

HSAs also allow unused funds to carry over from one year to the next. In other words, you don’t risk forfeiting unspent money. Plus, HSAs are portable — so if you change jobs or leave the workforce, you can keep your HSA. The maximum HSA contribution is $4,150 for an individual or $8,300 for a family in 2024.3

HSA qualifications

To contribute to an HSA in 2024, you must be covered under an HDHP with a minimum deductible of at least $1,600 for individual coverage, or $3,200 for families, and a maximum out-of-pocket amount of $8,050 for individual coverage, or $16,100 for families.3 In addition, you can’t be covered under any other health plan, with exceptions outlined by the IRS. You also can’t be enrolled in Medicare or be a dependent on someone else's tax return.1

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Understanding the key differences between FSAs and HSAs

The main differences between HSAs and FSAs come down to eligibility and flexibility.

HSAs require you to have an eligible HDHP, FSAs do not. With HSAs, there are often higher contribution limits compared to FSAs, and HSAs are portable. You’re also able to roll over your remaining balance from year to year with an HSA, while an FSA typically doesn’t allow for that.

Additionally, an HSA acts similarly to a savings account so it can earn interest or be invested to grow over time. You can also invest the funds in an HSA. Another difference is that self-employed individuals aren’t eligible for FSAs, since they’re only available through employers.1

How to spend FSA and HSA funds

Funds from an HSA or FSA can only be used on qualified medical expenses. Typically, these costs are anything that could be deducted as medical expenses on your income tax returns.5 They often include:

  • Doctor visits
  • Lab tests
  • Hospital stays
  • Prescriptions
  • Dental and vision care

To determine the best ways to spend your tax-free funds, look at the FSA product eligibility lists and HSA product eligibility lists. Also, be sure to ask your human resources (HR) representative if you need more information about these benefits.

FSA vs. HSA: Which is better for you?

While the decision between an HSA and an FSA depends on your specific circumstances, an HSA often offers more flexibility. It also allows you to roll over unused money and usually has higher contribution limits. However, you must be enrolled in an HDHP to have an HSA, as they’re not accessible to everyone.1

If an HSA isn’t available to you, an FSA can be a good alternative, since it still uses pre-tax money to pay for medical expenses. However, it’s important to remember that unused funds may disappear at the end of the year, as they typically don't roll over.1

Can you have both an FSA and an HSA?

While your employer might offer both an FSA and an HSA, you’ll generally need to pick which one you’d like to contribute to. However, some types of FSAs are HSA-compatible, meaning you’ll be able to contribute to both at the same time.

HSA-compatible FSAs may include a limited-purpose FSA (LP-FSA), dependent-care FSA (DC-FSA), or a post-deductible FSA. An LP-FSA typically only covers eligible dental and vision expenses, while a DC-FSA covers expenses for your dependents. And a post-deductible FSA covers all qualified medical expenses once you’ve reached your minimum HSA deductible for the year.

Check with your employer or benefits administrator to learn what their rules are for using an FSA and HSA simultaneously.

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1 “Publication 969 (2022), Health Savings Accounts and Other Tax-Favored Health Plans,” IRS

2 “IRS provides tax inflation adjustments for tax year 2024,” IRS, 2023

3 “26 CFR 601.602: Tax forms and instructions,” IRS

4 “High Deductible Health Plan (HDHP),”

5 “What are Qualified Medical Expenses?,” U.S. Department of Health & Human Services

Nothing in these materials is intended to apply to a particular individual's financial situation.