HSA vs FSA

How's a HSA and FSA similar?

A HSA and a FSA are similar in that they both are tax-exempt; you may make pre-tax contributions to a HSA or FSA. They are both also used for medical expenses.

How's a HSA and FSA different?

Employer-established

A FSA is an employer-established benefit, so is only available through an employer and not available if you’re self-employed. You may, however, open a HSA on your own.

How much to contribute

You must decide at the beginning of the year how much you want to contribute towards your FSA, whereas for a HSA you may contribute however much you’d like under the contribution limit. If you switch jobs or have a change in your marital status or dependents, then you may change your FSA contribution amount.

For 2020, the contribution limit per FSA is $2,750. For a HSA, the limit is $3,550 for individuals and $7,100 for families. If you’re 55 years old or older, you may contribute an additional $1,000.

Portability

The savings in a FSA are not portable once you leave an employer. That means if you don’t use your contribution to your FSA, you’ll forfeit the money. HSA contributions are portable from employer to employer or even if you’re not employed. You lose any unused amount in a FSA at the end of the year, but HSA savings don’t expire.