HSA vs FSA: Which One Pays for What
Last updated September 10, 2026.
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) both let you pay for medical expenses with pre-tax dollars. The main difference: HSA funds roll over year to year and you must have a high-deductible health plan to open one. FSA funds typically expire at year end and are offered through employers with any type of health plan.
What both accounts cover
HSAs and FSAs pay for the same list of qualified medical expenses. This includes doctor visits, prescriptions, dental care, vision care, mental health services, and many over-the-counter medications and supplies.
Both accounts also cover medical equipment like crutches, blood pressure monitors, and diabetic supplies. You can use either account for copays, coinsurance, and costs that apply to your deductible.
Neither account covers health insurance premiums in most cases. Cosmetic procedures, vitamins without a prescription, and gym memberships are also not eligible.
How HSAs work
To open an HSA, you must be enrolled in a high-deductible health plan. For 2024, that means a plan with a deductible of at least $1,600 for individuals or $3,200 for families. You cannot have other health coverage and you cannot be claimed as a dependent on someone else's taxes.
You can contribute up to $4,150 as an individual or $8,300 as a family in 2024. If you are 55 or older, you can add an extra $1,000. Your employer may also contribute to your HSA.
The money in an HSA is yours permanently. It rolls over every year, earns interest, and can be invested. You can take it with you if you change jobs or retire. After age 65, you can withdraw HSA funds for any reason without penalty, though non-medical withdrawals are taxed as income.
How FSAs work
FSAs are offered by employers and work with any health plan. You do not need a high-deductible plan. You choose how much to contribute during your employer's open enrollment period, and that amount is deducted from your paycheck in equal portions throughout the year.
For 2024, you can contribute up to $3,200 to a health care FSA. Your employer may also contribute, but combined contributions cannot exceed the limit.
FSA funds are generally use-it-or-lose-it. Most plans require you to spend the money by the end of the year or you forfeit it. Some employers offer a grace period of up to two and a half months or let you roll over up to $640 into the next year, but not both. If you leave your job, you typically lose access to remaining FSA funds unless you elect COBRA continuation.
Who should choose which account
If your employer offers an HSA-compatible high-deductible plan and you are generally healthy with predictable medical costs, an HSA often makes more sense. The rollover feature and investment options turn it into a long-term savings tool.
If you have significant planned medical expenses in a given year, an FSA lets you access the full annual amount immediately even though you contribute over time. This front-loading can be useful for scheduled surgeries, orthodontia, or fertility treatments.
If your employer does not offer a high-deductible plan, an FSA is your only option for a tax-advantaged health account. Some workplaces allow you to have both an HSA and a limited-purpose FSA that covers only dental and vision expenses.
Dependent care FSAs are separate
A dependent care FSA is a different account that pays for child care or adult care expenses so you can work. It has its own contribution limit of $5,000 per household in 2024 and follows the same use-it-or-lose-it rule.
You cannot use a dependent care FSA for medical expenses, and you cannot use a health care FSA or HSA for dependent care. They are distinct accounts with distinct purposes.
How to decide before open enrollment
Review your expected medical expenses for the coming year. Add up prescriptions, planned procedures, therapy visits, and routine care. Compare that total to your plan's deductible and out-of-pocket maximum.
If you expect high costs, a lower-deductible plan with an FSA might save you more than a high-deductible plan with an HSA, even with the tax benefits. If you expect low costs and want to build health savings long term, an HSA-compatible plan is usually better.
Check your employer's specific FSA rules during open enrollment. Some offer more generous carryover or grace periods than others. Once you enroll, you generally cannot change your FSA contribution until the next year unless you have a qualifying life event like marriage or a new child.
Common questions
Can I have both an HSA and an FSA?
You cannot have a general health care FSA and an HSA at the same time. However, if you have an HSA, you can also have a limited-purpose FSA that only covers dental and vision expenses. You can also have a dependent care FSA alongside an HSA because dependent care FSAs are for child care, not medical costs.
What happens to my FSA money if I do not use it?
In most plans, unused FSA funds are forfeited at the end of the plan year. Some employers offer a grace period of up to two and a half months to spend the money, or they allow you to roll over up to $640 to the next year. Your employer can offer one of these options but not both. Check your plan details during open enrollment.
Do I lose my HSA if I change jobs?
No. An HSA is your personal account and stays with you when you change jobs or retire. The money rolls over indefinitely and you can continue to use it for qualified medical expenses. You can keep contributing to the HSA as long as you remain enrolled in a high-deductible health plan.
Can I use an HSA or FSA for therapy or mental health care?
Yes. Both HSAs and FSAs cover mental health services, including therapy sessions, psychiatrist visits, and prescription medications for mental health conditions. Copays and costs that apply to your deductible are eligible expenses.
How do I know if my health plan qualifies for an HSA?
Your health plan must meet IRS requirements for a high-deductible health plan. For 2024, that means a deductible of at least $1,600 for individuals or $3,200 for families, and an out-of-pocket maximum no higher than $8,050 for individuals or $16,100 for families. Your insurance company or employer will clearly label HSA-compatible plans during open enrollment.
Sources
- IRS - Health Savings Accounts and Other Tax-Favored Health Plans
- Healthcare.gov - Health Savings Account (HSA)
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