Healthcare costs can be expensive, even for the healthiest people. Even if you have health care
insurance, you may want to take advantage of other options for saving for medical expenses not
covered by insurance. Outlined below are some of the differences between the two most common
accounts offered to individuals and families, health savings accounts (HSA) and flexible spending
accounts (FSA).
What is an FSA and HSA?
A flexible (or “flex”) spending account (FSA) is another way for employees to set aside pre-tax
dollars via payroll deduction for health-related expenses. A flex spending account is paired with
various health insurance plans and allows employees to set aside dollars for that calendar year.
A health savings account (HSA) is a tax-advantaged account that is paired with a high-deductible
health plan. If someone has relatively low health expenses, they may choose a high-deductible
health plan to save on premium costs.
HSA and FSA Differences
Although HSAs and FSAs both reduce out-of-pocket health costs and offer tax savings, there are important distinctions that may influence which option works best for you. Understanding the differences between the two helps align your health care choices with your financial goals.
| Feature | Health Savings Account (HSA) | Flexible Spending Account (FSA) |
| Eligibility | Must be enrolled in a High-Deductible Health Plan (HDHP) | Available through most employer benefit programs, regardless of plan type |
| Ownership | Individually owned; stays with you even if you change jobs | Owned by your employer; access typically ends if you leave your job |
| Contributions Limits (2025) | $4,300 – Individual$8,550 – Family (Can contribute an additional $1,000 if over age 55) | $3,300 – Individual $6,600 – Family (requires both spouses to have FSA options through their separate employers) |
| Investing Funds | Can be invested typically once a minimum balance is met | Cannot be invested; funds are strictly for medical spending |
| Eligible Expenses | Covers qualified health expenses; after age 65, funds can be used for non-medical expenses | Covers qualified health expenses |
| Rollover | Unused funds roll over year to year without limit | Generally, “use-it-or-lose-it” |
JNBA has been supporting clients with financial advice for nearly five decades. Reach out to our team with any questions on HSAs vs FSAs.
Plan Eligibility
FSAs are widely available because they are tied to employer benefit programs. You do not need to be enrolled in a specific type of health insurance to qualify, making it accessible to many employees. However, the account is only available while you’re with an employer that offers it.
To open and contribute to an HSA, you must be covered by a qualifying high-deductible health plan (HDHP). This requirement can limit eligibility, but it also means HSAs are often paired with plans that have lower monthly premiums.
Ownership
FSAs are owned and managed by your employer, which means your access to the account ends if you change jobs or leave the company. Any unused funds may be forfeited, depending on the plan’s rollover provisions.
HSAs, in contrast, are fully owned by you as an individual. The account stays with you regardless of your employer or health plan changes, making it a more permanent tool in your financial strategy. Because you maintain ownership, your contributions remain available to you year after year.
Contribution
Contributions to HSAs are made pre-tax via payroll deduction or from after-tax dollars. In both scenarios, you are eligible to receive a deduction on your tax return for your current year contributions to the plan. Health savings accounts are subject to maximum contribution limits. In 2025, an individual can contribute up to $4,300, and a family can contribute up to $8,550. If you are over 55, you can contribute an additional $1,000.
For FSAs, a set amount is withheld from the employee’s paycheck each period as a contribution. When employees incur qualified expenses, they must submit an expense report to receive reimbursement from the plan. Flex spending accounts are subject to maximum contribution limits in 2025 of $3,300 for an individual.
Investing Funds
Flexible spending accounts are designed only for short-term medical spending, so contributions cannot be invested. Once FSA funds are deposited, they are available exclusively for eligible expenses within the plan year.
Health savings accounts go a step further by allowing you to invest unused HSA funds once the account reaches a certain balance. This feature can transform an HSA into a long-term savings and investment option, providing you with the opportunity to grow your balance over time while still maintaining funds available for healthcare needs.
Eligible Expenses
Money withdrawn from an HSA is tax-free when used for qualified medical expenses. Qualified health savings account expenses include prescription drugs, eyeglasses, deductibles, and co-payments. For a full list of eligible health expenses, check with your plan provider. If you withdraw money from an HSA for a non-qualified medical expense, you will have to include the withdrawal as taxable income for the year, and you may be subject to a 20% penalty if you are under the age of 65.
Similar to a health savings account, money can be spent on qualified expenses for a flexible spending account. This includes prescription drugs, eyeglasses, deductibles, and co-payments. For a full list of eligible medical expenses, check with your plan provider. Also, similar to a health savings account, if you use funds to pay for qualified medical expenses, you will likely not owe taxes on withdrawals.
Funds Rollover
One primary difference between an HSA and FSA is whether or not you have the ability to roll your funds forward each year. In a flex spending account, whatever funds remain in your account at year end are forfeited or lost, often referred to as the “use-it-or-lose-it” provision.
The primary advantage of an HSA is the ability to keep the balance in this account, whether you use the funds or not. You can build a balance in the account over time, and some plans even allow you to invest the money within the account, which can generate further growth.
Reach out to JNBA today to learn how FSAs and HSAs can support your long-term strategy.
When to Choose a Health Savings Account vs. Flexible Spending Account
The decision between a flexible spending vs. health savings account often depends on your health plan, spending habits, and long-term goals. If you don’t have a high-deductible plan, an FSA may be your best option. However, if you qualify for an HSA, the ability to carry funds forward and invest them can make it a valuable planning tool for both today and the future.
Can you have an HSA and FSA?
You cannot contribute to an HSA and have a general-purpose health FSA in the same year. It is OK to contribute to an HSA and have a limited-purpose FSA (used to pay for eligible dental or vision expenses) or a dependent care FSA (used to pay for eligible dependent care services such as preschool, summer day camp, before/after school programs, and child or elder care).
Get Support from JNBA During FSA and HSA Open Enrollment
Open enrollment is an important time to make choices that affect your financial well-being throughout the year. Deciding between an HSA vs. FSA can feel complex, but you don’t need to navigate the decision on your own.
At JNBA, we’ve been guiding individuals and families for more than 45 years. Our team of fiduciary advisors takes the time to understand your goals, advocate for your best interests, and provide clarity when making financial decisions. If you are interested in exploring how working with a financial advisory team could help you with your financial planning and investment management needs, connect with our team. We’re here to help you make confident, well-informed choices that are best for you and your family.
JNBA is not an accountant and no portion of the above should be construed as accounting advice. All accounting issues should be addressed with an accounting professional of your choosing.
Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from JNBA Financial Advisors, LLC.
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