What is an FSA vs HSA? Understanding the Differences

Health Savings Account (HSA) and Flexible Spending Account (FSA) are both popular tax-advantaged accounts that help individuals save money for healthcare expenses. While they share similarities, there are key differences between the two that are important to understand.

Here is a breakdown of FSA vs HSA:

Flexible Spending Account (FSA)

• An FSA is an employer-sponsored account that allows employees to set aside pre-tax dollars for eligible healthcare expenses.
• Contributions to an FSA are deducted from your paycheck before taxes, reducing your taxable income.
• FSAs have a
  

  Health Savings Account (HSA) and Flexible Spending Account (FSA) play significant roles in budget-friendly healthcare planning. While both accounts allow you to set aside money for medical expenses, they come with distinct rules and benefits.

  Understanding Your Options

  • Health Savings Accounts are typically associated with high-deductible health plans, enabling individuals to save money tax-free for qualified medical costs.
  • In contrast, Flexible Spending Accounts are limited to employer contributions and have a 'use it or lose it' policy, where unspent funds may expire at the end of the plan year.