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Making Sense of Medical Savings Accounts

HSAs v. FSAs

Written by: Andrew Hall.

Four stacks of quarters that get larger from left to right.

Medical savings accounts offer a tax-free way to save money for qualified medical expenses while also lowering your taxable income, giving you a little bit of help from Tax Day. Although both types of medical savings account help you set aside money to offset your healthcare costs, there are a few key differences between the two to consider before choosing which one.

Health Savings Account (HSA) versus Flexible Spending Account (FSA)


HSA: You must enroll in a qualified High Deductible Health Plan (HDHP) to be eligible for an HSA.
Compared to FSA: To be eligible for an FSA, you must be an employee eligible for benefits through an employer that offers FSA benefits.


Maximum Annual Contribution

HSA: $3,550 for an individual and $7,100 for a family. [1]
Compared to FSA: $2,750 individual contribution.


What Happens to Unused Funds?

HSA: You keep unused funds regardless of plan enrollment or employment. It is a bank account with your name on it.
Compared to FSA: Some employers allow employees to roll over up to $500 of unused funds to your next plan year. If your employer does not allow this, all unused funds are forfeited.


How Can I Use This Money?

HSA: You can use HSA funds on qualified medical expenses. Additionally, after age 65, HSA funds can be used as a traditional retirement account.
Compared to FSA: You can use FSA funds on qualified medical expenses.


Does the Account Earn Interest?

HSA: Yes. An HSA account gains interest as long as you have the account.
Compared to FSA: No. FSA accounts do not earn interest and “resets” at the start of each benefit year.


How Do I Access the Money in My Account?

It’s common for both HSA and FSA accounts to provide debit cards to access the funds quickly.

What's Next?