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FSA vs. HSA: What’s the Difference?

December 09, 2022
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The end of a calendar year is often the deadline to use up the balance of your Flexible Spending Account (FSA), although some employers do follow a different timeline. If you participate in an FSA, be sure to track this closely so you don’t lose out.

Unlike FSAs, a Health Savings Account (HSA) does not need to be spent out before the end of the year. 

If you have medical or dental expenses, both FSAs and HSAs offer great tax advantages: the money you contribute to the account goes in pre-tax and qualified withdrawals are paid out tax-free. However, an FSA is technically owned by your employer, which is why any balance not used by the deadline is refunded to the employer. In other words, you lose any unused funds.

HSAs are owned by the participant. That means they are portable (if you separate from your employer you can take your HSA funds with you.) HSAs also may have savings or investment options which could offer tax-free growth opportunities.

So, while both FSAs and HSAs are valuable, HSAs offer greater tax advantages and savings potential. 

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