HSA vs. FSA Accounts: Side-by-Side Healthcare Comparison

What are the key differences between an HSA vs. an FSA?

By Christy Bieber – Updated Nov 28, 2025 at 11:08 AM EST

Key Points

HSAs offer investment opportunities and let you roll over funds indefinitely; FSAs don't.
You're only eligible for HSAs with a qualifying high-deductible health insurance plan.
HSAs offer withdrawals for any purpose after 65 taxed as income; FSAs are strictly for qualifying healthcare expenses.

Both a health savings account (HSA) and a flexible spending account (FSA) allow you to pay for medical care with pre-tax dollars, which reduces the cost. With healthcare accounting for 8.1% of Americans' average monthly expenses, these tax shelters are important financial tools.

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An infographic comparing the similarities and differences between HSA and FSA plans. — Image source: The Motley Fool.

But while an HSA and FSA sound similar, there are important differences between them.

HSAs are tax-advantaged accounts either you or an employer can open and contribute to if you have a qualifying high-deductible health plan (HDHP). HSAs allow you to make pre-tax contributions and take tax-free withdrawals to pay for covered care. The money in an HSA can be invested and grow over time and can also be withdrawn after age 65 and will be taxed at your ordinary tax rate with no penalties.
You can also make pre-tax contributions and take tax-free withdrawals from FSAs, but they can only be opened by employers. These accounts serve as a short-term savings account rather than an investment account. You must decide at the start of the year how much to contribute, the money cannot be invested, and it is lost if not used for medical care in the year it is contributed or shortly thereafter.

HSAs provide much more flexibility on how you spend your money, while FSAs allow you to pay for both medical care and dependent care with pre-tax dollars. This guide will help you understand how the rules differ when it comes to eligibility, using account funds, and more.

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What Is An HSA & How Does It Work?

Health savings accounts can help you pay for your medical expenses with pre-tax money.

HSA-Eligible Expenses in 2025 and 2026

Learn what counts as an eligible health savings account expense.

HDHP vs. PPO: Which Is the Right Choice for You?

This primer on different plans can help you find the right healthcare coverage for you.

How to Open an HSA: Everything You Need to Know

Health savings accounts (HSAs) are powerful financial tools for those who qualify. Here's how to open yours.

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Source: IRS.
Aspect	HSA	FSA

Eligibility rules	Employers may offer an HSA, but individuals can open their own. You must have a qualifying HDHP to be eligible to make HSA contributions.	Only employers offer FSAs. Any employee can contribute to an FSA if their employer offers one.
Annual contribution limits	$4,300 for self-only coverage in 2025 ($4,400 in 2026). $8,550 for family coverage in 2025 ($8,750 in 2026). $1,000 additional catch-up contribution for those older than 55 in 2025 and 2026.	$3,300 per plan for a healthcare FSA in 2025 ($3,400 in 2026). If both spouses have FSAs, each can contribute this amount. $5,000 total per family for dependent-care FSAs in 2025 ($2,500 if married filing separately) and $7,500 total per family in 2026. This $7,500 limit still applies if both spouses have FSAs.
Contribution rules	Contributions are made with pre-tax dollars. Employers or employees can contribute. You have flexibility in how much to contribute during the year, and contributions can be made until the tax deadline.	Contributions are made with pre-tax dollars. Employers or employees can contribute. You must determine how much to contribute at the start of the year and the amount cannot change.
Account ownership	Employees own HSAs and can take them with them when leaving a job.	Employers own accounts and leaving a job means losing access to the account unless you elect COBRA continuation if eligible.
Withdrawal rules	You can access funds only after contributing. Money can be withdrawn for any purpose, but withdrawals are subject to a 20% penalty plus income taxes if made for anything other than qualifying medical services. After age 65, you can withdraw money for any purpose penalty-free but will be taxed at your ordinary income tax rate.	You have immediate access to the amount you elected to contribute to the FSA for the year, even if you haven't yet funded your account. Money can be used only for qualifying medical expenses.
Investing rules	HSA money can be invested and grow tax-free.	FSA money cannot be invested.
Carryover rules	Money in your HSA can remain invested and does not have to be used in the year the contributions were made.	Money may be lost if not used in the year the contributions are made. Some plans allow you to carry over $660 in 2025 ($680 in 2026) if the money remains unused. Some plans allow a 2 1/2-month grace period to use the money after the end of the year.

For many people, an HSA offers more flexibility and is a better choice. However, if you do not have a qualifying HDHP and therefore aren't eligible for an HSA, and your employer does offer an FSA, it may be your best option for paying for healthcare expenses with pre-tax dollars.

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Source: IRS.
Pros and Cons	HSA	FSA

Pros	Contributions can be invested. Account funds are not "use it or lose it" -- money remains in your account until you choose to withdraw it. You have flexibility to decide how much to contribute during the course of the year. Money can be withdrawn for any purpose without penalty after age 65.	You don't need a qualifying HDHP to contribute. You can put away pre-tax money not just for healthcare but also for dependent care. You'll get immediate access to the funds you elect to contribute for the year.
Cons	You're eligible for an HSA only if you have a qualifying HDHP. You can access funds only after they've been contributed.	If you don't use your FSA contribution within the year it is made (or within any applicable grace period), you could lose the contributed funds. FSA money can be used only for medical expenses. Money in an FSA cannot be invested.

Be sure to consider the advantages and disadvantages of each account type to make the best choices for covering your healthcare needs.

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FAQs about HSA vs. FSA

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About the Author

Christy Bieber is a contributing Motley Fool retirement and Social Security expert covering retirement planning, 401(k)s, IRAs, and other personal finance topics. Christy has written about finance since 2008 and previously taught business courses at Bryant & Stratton College. She holds a law degree from UCLA and a bachelor’s degree in English, media, and communication with a certificate in business management from the University of Rochester. In law school, she earned three CALI Awards for Excellence for the highest scores in civil procedure and contract law exams.

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