Are FSA and HSA Eligible Expenses the Same?

One common question that individuals with health savings accounts (HSAs) and flexible spending accounts (FSAs) often have is whether the eligible expenses are the same for both accounts. While both accounts help individuals save money on qualified medical expenses, there are some key differences between the two.

Health savings accounts (HSAs) and flexible spending accounts (FSAs) are both types of tax-advantaged accounts that can be used to pay for eligible medical expenses. Here is a breakdown of how the two accounts compare:

• Eligible Expenses:
• Health Savings Account (HSA):
• Expenses must be for qualified medical expenses as defined by the IRS.
• Can be used for a wide range of medical expenses, including deductibles, co-pays, prescriptions, and more.
• Flexible Spending Account (FSA):
• Expenses must also be for qualified medical expenses as defined by the IRS.
• Similar to HSAs, FSAs can be used for various medical expenses such as co-pays, prescriptions, and certain over-the-counter items.
• Contribution Limits:
• HSAs typically have higher contribution limits compared to FSAs.
• Contributions to an HSA roll over from year to year, while funds in an FSA are subject to a 'use it or lose it' rule at the end of the plan year.
• Portability:
• HSAs are portable, meaning the account is owned by the individual and can be carried over even if they change jobs or health plans.
• FSAs are usually tied to an employer and are not portable if the individual leaves the company.

While there are some similarities in the eligible expenses for HSAs and FSAs, it's essential for individuals to understand the specific rules and limitations of each account type to make the most of their healthcare savings.

When it comes to navigating the world of healthcare savings, understanding the differences between Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) is crucial. Both offer tax advantages for saving on medical expenses, but their eligible expenses can vary significantly.