How does an HSA differ from an FSA?

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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.