FSA vs HSA: Which is Better?

What are the main differences between an FSA and an HSA?

An FSA (Flexible Spending Account) is owned by your employer and allows you to use pre-tax dollars for eligible expenses, while an HSA (Health Savings Account) is owned by you and requires a high-deductible health plan. HSAs have higher contribution limits and funds roll over year to year.

Which one is better for saving money on healthcare?

It depends on your situation. HSAs are generally better for long-term savings and investment, while FSAs are useful for short-term expenses. If you have a high-deductible plan and can afford to save, an HSA might be the better choice.

Can I use both an FSA and an HSA?

Yes, you can use both, but there are some restrictions. If you have an HSA, you can only use a limited-purpose FSA for dental and vision expenses.

What happens to my FSA funds if I don't use them?

FSA funds typically have a 'use-it-or-lose-it' policy, meaning you lose any unspent funds at the end of the plan year, unless your employer offers a grace period or allows a small carryover.