What are the differences between FSA and HSA?

What are the differences between FSA and HSA?

FSA stands for Flexible Spending Account, while HSA stands for Health Savings Account. FSAs are owned by employers, and funds must be used by the end of the year, whereas HSAs are owned by individuals and funds roll over year to year.

Can I use both an FSA and an HSA?

Yes, you can use both, but there are specific rules. Generally, you can have an HSA if you have a high-deductible health plan, and you can use an FSA for certain out-of-pocket expenses.

What are the contribution limits for each?

For 2023, the contribution limit for HSAs is $3,850 for individuals and $7,750 for families. FSAs have a limit of $3,050.

What happens to the money in an FSA if I don't use it?

Typically, any unused funds in an FSA are forfeited at the end of the plan year, unless your employer offers a grace period or allows a carryover of a limited amount.

Are there tax benefits for using an HSA?

Yes, contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free.