What is an HSA?

A Health Savings Account (HSA) is a tax-advantaged account available to individuals with a High Deductible Health Plan (HDHP). Contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. HSA funds roll over year-to-year indefinitely and can be invested for long-term growth. The account is owned by you and portable when you change jobs.

What is an FSA?

A Flexible Spending Account (FSA) is an employer-sponsored account that allows you to set aside pre-tax dollars for qualified medical expenses. Contributions reduce your taxable income, providing immediate tax savings. However, FSA funds typically have a "use-it-or-lose-it" rule, meaning unused funds at the end of the plan year are forfeited (though some plans allow small carryovers or grace periods).

Basic Differences

• Ownership & Rollover: HSAs are owned by you and funds roll over indefinitely; FSAs are typically tied to your employer and have use-it-or-lose-it rules.
• Use-It-Or-Lose-It Risk: FSAs have forfeiture risk if you don't use all funds; HSAs have no such risk.
• Tax Treatment: Both offer pre-tax contributions and tax-free withdrawals for qualified expenses. HSAs also offer tax-free growth on investments.
• Investment: HSAs can be invested for growth; FSAs cannot be invested.
• Eligibility: HSAs require an HDHP; FSAs are available with most employer health plans.

Why Actual Results May Differ

This simplified calculator does not account for all IRS rules, employer-specific plan details, state tax differences, HDHP eligibility requirements, contribution limits that vary by coverage type, specific qualifying expenses, investment fees, or other complexities. Real-world details matter and can significantly affect your actual tax savings and net benefit.