What Are the Main Differences Between an HSA and an FSA?

HSAs (Health Savings Accounts) and FSAs (Flexible Spending Accounts) are both great ways to use pre-tax dollars to pay for qualified medical expenses.

In 2024, overall healthcare costs increased by 6.7% in the U.S., with Americans paying an average $1,142 in out-of-pocket medical costs for the year, according to the Milliman Medical Index. The number was even higher for families, with the average family of four spending about $3,564 in out-of-pocket medical expenses, according to Peterson-KFF’s Health System Tracker.

Having an HSA or an FSA can help you save money on qualified medical, dental, and vision expenses using your pre-tax dollars. However, you can’t have both an HSA and a standard FSA. Here are some key differences between an HSA and an FSA so you can choose the plan that works best for you.

HSA vs. FSA At a Glance

• An HSA, or Health Savings Account, is owned by you permanently. If you have an HSA with your employer and leave the company, you take the HSA with you. To qualify for an HSA, you must be enrolled in a HDHP (High-Deductible Health Plan).
• An FSA, or Flexible Spending Account, is owned by your employer, so if you leave the company you cannot take it with you. You do not need to have a HDHP, if your employer offers an FSA and you’re eligible, you can enroll.

• HSA: You, your employer, your spouse or family members can contribute up to $4,400, into your HSA, according to the 2026 IRS limit. If you or your spouse are over the age of 55, you can each contribute an additional $1,000 into your HSAs, known as a catch-up contribution.
• FSA: You and your employer can contribute up to $3,400 into your FSA per the 2026 IRS limit. If your employer chooses to, they can contribute up to $500 into your FSA, and match your contributions dollar-for-dollar, but cannot exceed the annual limit set by the IRS.

HSA:

• The balance in your HSA grows over time.
• You can spend the money in your HSA on eligible purchases with a pre-paid debit card if your plan offers one, or pay out-of-pocket and reimburse yourself later.

FSA:

• The entire balance of your FSA is available to you on Day 1 of the plan year.
• You can spend the money in your FSA on eligible expenses during the plan year by using a pre-paid debit card or submitting a claim with an itemized receipt and get reimbursed.
• Note: Submit your claims by your FSA plan’s run-out deadline to get reimbursed.

Both: Whether you have an HSA or an FSA, make sure you keep itemized receipts for all transactions, and never reimburse the same expense twice. If it's required by the plan, you may need to obtain a Letter of Medical Necessity (LMN) for a product or a service that is both personal and medically necessary such as massages or a mattress.

HSA:

• One of the main differences between an HSA and an FSA is that any unused funds in your HSA stay indefinitely and grow tax-free.

FSA:

• With an FSA, you lose any unused funds at the end of the plan year.
• Depending on your employer’s plan, you may have a grace period to spend leftover FSA funds or carryover some funds into the next plan year, but not both.
• If your employer allows you to carry over funds, the maximum carryover amount is $680, according to the IRS. Your employer may have a different limit on the amount you can carry over.

Generally, you can’t have both an HSA and a general-purpose FSA. However, you can pair an HSA with a Limited-Purpose FSA (LPFSA) so you can let the money in your HSA grow to use for bigger expenses, while using your LPFSA to spend on qualified dental and vision costs.

• If you have an HSA, pair it with a LPFSA that can be used for eligible dental and vision expenses such as glasses, contacts, mouthguards, Invisalign and more.
• If allowed by your employer, you can use your LPFSA to spend on qualified medical expenses (as opposed to only dental and vision expenses) after meeting the deductible of your HDHP, known as a Post-Deductible FSA.

• You can’t have both an HSA and a general-purpose FSA. This includes your spouse—if they have a general-purpose FSA, you are not eligible to have an HSA at the same time.
• Watch carryover: If your GP-FSA carries over into a new plan year, it can make you ineligible for an HSA unless it’s converted to an LPFSA.

• HSAs are triple-tax advantaged: You contribute pre-tax dollars that grow tax-free, and make tax-free withdrawals for healthcare costs.
• The money in your HSA grows over time and can be invested, which makes it useful to pay for bigger healthcare costs or medical expenses in retirement.

• FSAs give you immediate access to your pre-tax dollars so you can save on predictable, annual healthcare costs such as glasses, dental care, and copays.

Spend your FSA money on annual healthcare expenses such as co-pays, prescriptions, OTC medicines, glasses, and physical therapy. Some items, such as supplements, gym memberships, and adaptive footwear may be eligible for qualified customers when used to address a specific health condition and supported by a Letter of Medical Necessity (LMN). Many FSAs are use-it-or-lose-it, so prioritize FSA spending first and be sure to check your plan details.

Your HSA funds may be eligible for big one-time expenses when used to manage a specific health condition and supported by an LMN, such as medical or fitness equipment, smart watches, saunas, cold plunges, or a mattress.

HSA funds typically rollover each year. When deciding how much to contribute, consider your personal financial situation and your plan details.

Some HSA plans allow you to invest your funds. If your plan allows, investing your HSA may help you prepare for future medical expenses.

Besides the list of eligible healthcare expenses, there may be other products and services to spend your FSA and HSA money on when used to treat or manage a specific health condition and are supported by an LMN. Here’s how Truemed* can help:

• Truemed helps connect you with an independent licensed practitioner who reviews your health survey, and if appropriate, issues a Letter of Medical Necessity.
• An LMN can help qualified individuals spend HSA or FSA money on eligible items, helping you save more and make the most of your health savings. Note: An LMN does not increase your contribution limits or extend deadlines to spend HSA or FSA funds.

*Truemed is for qualified customers. See terms at truemed.com/disclosures.