HSA vs. FSA: Which Should You Choose During Open Enrollment 2027?

A Health Savings Account (HSA) is a tax-advantaged account available to people who meet IRS eligibility requirements and have qualifying HSA-eligible health coverage. The account belongs to you, so unused money rolls over indefinitely and stays with you even if you change jobs.

Depending on your HSA provider, you may also be able to invest some of your balance and use the account to build savings for future healthcare expenses.

A healthcare Flexible Spending Account (FSA) on the other hand is an employer-sponsored benefit that lets you set aside pre-tax income for qualified healthcare expenses. You don't need an eligible health plan, but the FSA must be offered by your employer.

FSAs generally follow a use-it-or-lose-it rule which means your unused funds will expire at the end of the year. Your employer may allow a limited carryover or grace period, but unused funds outside these provisions may be lost.

If you need the skinny on HSAs vs HSAs check out our full comparison guide.

HSAs and FSA contribution limits usually update every year so it’s a good idea to check your contribution limits for each option during open enrollment. The IRS has set the HSA contribution limits for 2027 at $4,500 for self-only coverage and $9,000 for family coverage.

The HSA annual limit includes both employee and employer contributions so if your employer contributes $1,000 toward your self-only HSA, for example, you’ll have $3,500 of the 2027 limit remaining for your own contributions.

If you’re over 55, there’s some good news. You’ll be allowed to contribute an additional $1,000 as a catch-up contribution. Keep in mind that if you’re married, you and your spouse can contribute an extra $1000 to your own HSAs each.

Something else to keep in mind is that you will not be allowed to contribute to an HSA if you join Medicare, and that includes catch-up contributions.

For FSA contributions, the 2027 contribution limit hasn’t been announced yet but for comparison, the 2026 limit is $3,400. FSA contribution limits are usually announced in October so keep your eyes peeled for the announcement from the IRS.

Also keep in mind that your employer may have a lower contribution limit than Uncle Sam so make sure to also check with your HR if you have any questions.

Remember these contribution limits don’t necessarily mean you need to contribute the maximum. It’s a good idea to consider your expected healthcare spending for the year and how much you can comfortably afford to set aside.

First you need to check your eligibility. To be eligible for an HSA, you will need to be enrolled in a qualified High-Deductible Health Plan (HDHP) and you can’t be part of any other disqualifying healthcare coverage. A disqualifying coverage would include Medicare, a general purpose FSA, be covered as dependent on a spouse's traditional health plan (meaning not an HDHP), or be claimed as a dependent on a someone else’s taxes.

FSA eligibility is quite straightforward, your employer simply needs to offer it and you can’t be signed up to a general purpose FSA if you already have an HSA.

Now that you know what you’re eligible for, your main consideration would be how you expect to use the account.

An HSA may be a good choice if you want unused healthcare funds to remain available in future years. There's no annual use-it-or-lose-it rule, and the account remains yours if you change employers.

It may be particularly valuable if your employer contributes to your HSA or you want to build healthcare savings over several years. Some HSA providers also allow you to invest unused funds.

The tradeoff is the health coverage required for HSA eligibility. You’ll need to be enrolled in an HDHP so you’ll need to decide if you're comfortable with the deductible and potential out-of-pocket expenses associated with the health plan available to you.

An FSA may make sense if you aren't HSA eligible or have fairly predictable healthcare expenses.

Regular prescriptions, dental work, vision expenses, and recurring medical costs can make it easier to estimate how much you'll spend during the year.

Your full annual FSA election is also generally available during the coverage period, even before you've contributed that amount through payroll.

Here your main concern would be estimating your annual healthcare costs carefully because unused funds may be forfeited depending on your employer's carryover or grace-period rules.

During open enrollment, you may actually be choosing between something like an HSA-eligible health plan + HSA and a traditional health plan + FSA.

Choosing the right combination is important because the better account doesn't necessarily come with the better health plan for your needs.

When choosing between an HSA vs an FSA during open enrollment, you need to compare annual premiums, deductibles, copays or coinsurance, out-of-pocket maximums, employer contributions, prescription costs and your expected medical expenses.

A higher deductible plan could still cost less overall if its premiums are significantly lower and your employer contributes to your HSA.

Calculate how much you'll pay toward each health plan per paycheck and convert it into an annual figure.

Look at the deductible alongside copays and coinsurance. A lower deductible doesn't automatically mean lower overall healthcare costs if you're paying significantly higher premiums.

Your out-of-pocket maximum gives you an important measure of your potential costs during a high-spending medical year. Consider whether you could comfortably manage that amount over and and above your health plan premiums and your planned contributions.

Your employer’s contributions can change the financial implications of your options. You need to consider their contributions to your HSA because unused HSA money remains yours even when you move to another company.

Review what you've spent recently and look at what your expenses might be for 2027, including prescriptions, specialist visits, therapy, dental and vision care, planned procedures and ongoing treatments.

Don’t forget to include expected healthcare expenses for other family members covered by your plan.

The main benefit of a HSA or FSA is the much needed tax benefits. HSA and FSA contributions can reduce your taxable income when the applicable requirements are met so you also need to factor the potential tax savings into your overall cost comparison.

Crunch the numbers for a typical year and a high-cost medical year. This can show you how each plan performs under different circumstances instead of assuming your healthcare use will stay the same.

Since FSA funds don't roll over, you need to ensure that you don’t contribute too much each year. A good place to start is to look at last year's eligible healthcare expenses and add costs you reasonably expect in 2027.

Again, you’ll want to include prescriptions, copays, dental care, vision expenses and planned treatment. It’s also a good idea to check whether your employer offers a carryover or grace period before deciding on your contribution.

With FSAs it’s generally better to be conservative with any expenses you’re unsure about. We’ve not yet figured out how to grow money on trees so you certainly don’t want to part with your hard earned dollars unnecessarily.

If you do end up with extra funds at the end of the year, don’t panic. There’s actually a lot more you can do with your FSA dollars than you might think. For example, preventive health products like gym memberships, supplements, and even adaptive footwear may be FSA eligible for qualified customers when accompanied by supporting documentation from a licensed clinician linking the product to a documented health or medical condition.

That documentation is often a Letter of Medical Necessity (LMN). Check out our LMN guide to learn more about how those documents work and what kinds of health products they may help qualified customers access.

HSAs are a lot more forgiving since your unused money rolls over indefinitely.

First you want to check what your employer is going to contribute since their contribution forms part of your total contribution limit. Once you’ve deducted their contribution, you could choose to contribute enough to cover expected medical expenses or aim to cover your deductible.

If you plan on using your HSA as a longer-term healthcare savings vehicle, you can opt to contribute more than your annual expected health expenses or even aim to reach the annual maximum if it comfortably fits into your broader financial strategy.

Like FSAs, HSAs too can cover a lot more than you might think. Check out our HSA/FSA eligibility guide to see what might be eligible.

As per the current IRS rules, a general-purpose healthcare FSA makes you ineligible to contribute to an HSA.

A Limited Purpose FSA (LPFSA) or Dependent Care FSA (DCFSA), however, still allow you to enroll in an HSA. A LPFSA typically covers eligible dental and vision expenses whereas a DCFSA only covers child or eldercare and doesn’t conflict with an HSA. If you’ve signed up for either these types of FSAs you should have no problem enrolling for an HSA.

• Check whether you're HSA/FSA eligible.
• Compare annual health plan premiums.
• Compare deductibles and coinsurance.
• Check each plan's out-of-pocket maximum.
• Review employer HSA or FSA contributions.
• Review your healthcare spending from this year.
• List known healthcare expenses for 2027.
• Check FSA carryover or grace-period rules.
• Consider the cost of an unexpectedly high-spending year.
• Estimate your potential tax savings.
• Decide how much you can comfortably contribute.

Choosing between an HSA and FSA during open enrollment depends on your eligibility, available health plans, expected healthcare needs and household finances.

An HSA offers more flexibility with unused funds and can help you build healthcare savings over time. An FSA in contrast can be valuable for predictable expenses and gives you access to your annual election during the coverage period.

Before making your final decision, compare the total costs and benefits of your health plans because premiums, deductibles, employer contributions and potential out-of-pocket costs can matter more than the differences between the accounts themselves.