HSA vs FSA: Which is Better?

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

An HSA (Health Savings Account) is owned by the individual and can roll over funds year to year, while an FSA (Flexible Spending Account) is employer-owned and typically has a use-it-or-lose-it policy.

Which one is better for saving money on healthcare expenses?

It depends on your situation. HSAs offer tax advantages and can be invested, making them better for long-term savings. FSAs are useful for predictable medical expenses but have stricter rules.

Can I use both an HSA and an FSA?

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

What are the tax benefits of each?

HSAs offer triple tax benefits: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified expenses are tax-free. FSAs allow pre-tax contributions, reducing your taxable income.