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Trying to decide between an FSA and an HSA for saving on healthcare costs?
HSA vs FSA
Here are the key differences between these two healthcare savings options.
Comparison Criteria | HSA | FSA |
Employee account, not tied to an employer | ✓ | |
Fund can be used for qualified medical expenses tax-free | ✓ | ✓ |
Available regardless of the healthcare plan you are enrolled in | ✓ | |
IRS contribution caps restart at new employer | ✓ | |
Can be invested for tax-free growth | ✓ | |
Can be used to cover retirement expenses after age 65 penalty-free | ✓ | |
Fund can be used to cover medical expenses in retirement tax-free | ✓ | |
Contributions are pre-tax | ✓ | ✓ |
Contributions are tax-deductible | ✓ | |
Fund can be used after the plan year is over | ✓ | |
Able to be paired with a Dependent Care FSA | ✓ | ✓ |
Funds can be used to pay for COBRA premiums | ✓ |
Eligible Expenses
You can use health savings accounts to submit claims for reimbursement for eligible healthcare expenses. For a list of eligible expenses, check out IRS publication 502.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.