What is an HSA vs. FSA?

Flexible spending accounts (FSAs) and health savings accounts (HSAs) are tax-advantaged accounts that help consumers pay for eligible out-of-pocket medical expenses not covered by insurance. The main differences between an FSA and HSA are who owns the account and if/when funds expire. FSAs are owned by an employer, and any unused funds must be forfeited back to them at the end of the year (or end of the grace period) or when an employee leaves the company. HSAs, on the other hand, are owned by the consumer, or employee. Any funds contributed to the account – whether by consumers themselves or their employer – are theirs to keep for life.

What are the benefits of FSAs and HSAs?

Healthcare costs in the U.S. continue to rise, with consumers shouldering more of the costs of their care. FSAs and HSAs can help make a consumer’s predictable annual medical expenses more affordable by using pre-tax dollars to pay for them.

How do I know if I am eligible for an FSA or HSA?

Anyone is eligible for an FSA, if their employer offers one. Because FSAS aren’t quite as flexible as HSAs, they are often prepared with more traditional health plan like a PPO. To be eligible for an HSA, consumers must be enrolled in an HSA-eligible high-deductible health plan (HDHP) through their employer.

What can I use my FSA and HSA for?

Consumers can use their FSA or HSA funds on out-of-pocket medical expenses not covered by their insurance. Typically, consumers receive a benefit debit card with which to make these purchases. Eligible items include doctor’s office visits, treatments, diagnostic tests, lab fees, medical devices, vision, dental, prescriptions, pharmacy items and various wellness items. Consumers can also visit online sites like FSAStore.com or HSAStore.com to purchase exclusively FSA- and HSA-eligible items, respectively.


Both FSAs and HSAs are tax-advantaged savings vehicles that help pay for out-of-pocket medical expenses. The two accounts have some similarities and many differences, as noted in the chart below.

Employer owns the account Consumer owns the account
Consumer elects an annual amount and funds the account through pre-tax withholdings from their paycheck. Employer sometimes contributes funds as well. Consumer elects and annual amount and funds the account through pre-tax withholdings from their paycheck. Employer sometimes contribute funds as well, a process known as employer seeding.
Consumer has immediate access to the annual amount elected. For example, if a consumer elects an annual amount of $2,000, that full amount is available at the start of the plan year. Consumer can only access funds as they build up in the account. For example, if a consumer elects an annual amount of $2,000 to be withdrawn from their paycheck in $83 increments, they will have access to only $83 after their first paycheck.
Annual FSA contribution limit for 2022: $2,850. Consumer determines election amount during open enrollment and can only change that amount in the case of a qualifying life event, such as marriage or the birth of a child. Annual HSA contribution limits for 2022: $3,650 (individual coverage) and $7,300 (family coverage). Consumer can adjust election amount at any time.
Employer receives any unused funds at the end of the year that cannot be rolled over, at the end of a specified grace period, or when a consumer leaves the company. Consumer owns his or her HSA funds for life. These funds can build up over time for long-term healthcare savings and for use in retirement. Consumer can withdraw funds at any time without penalty, as long as they are used on eligible items.