The Difference Between An FSA And An HSA

People nowadays are much more financially educated. Finding the best plans, insurances and savings account has never been this popular of a topic before. Now that most people are aware of their benefits, more and more people are opening such kinds of accounts.

Out of the many types of savings accounts that one can set up, the two most common types are the FSA (Flexible Savings/Spending Account) and the HSA (Health Savings Account). Though they are quite different, they do have notable similarities as well.

How flexible savings account and health savings account work?

  • Funds placed in these accounts can only be used for medical-related expenses. These include, but are not limited to:
  • Outpatient health services
  • Dental Services
  • Both are tax-free.

Regular savings accounts usually are not deductible to one’s tax liability. Having an FSA or HSA, however, will allow one to make more savings in terms of tax liabilities. Whatever amount they invest in them, they are already guaranteed of lesser income taxes.

  • Can also be used for other eligible expenses aside from health-related ones.

Despite the fact that both accounts are made to address health issues, the funds can also be used for one of the following eligible expenses:

  • Deductibles and co-payments
  • Medications (prescription and over-the-counter)
  • Medical supplies and diagnostic kits
  • Reimbursement from both accounts can be made after an employee submits proof for the claim.

No matter how similar they may seem, ultimately, they are bound to have some differences as well. Let us take a look at some of them.


  • Who are eligible to contribute?

Flexible SA – open only to the employed sector (self-employed individuals cannot avail of this). Employees can avail of this regardless if they have a high deductible health plan

Health SA- one must have HDHP to avail. There is a maximum deductible amount, regardless if it is an individual or family coverage. There is also a limit for the amount that one can avail each year. Self- employed individuals can avail of this.

  • Who owns the account?

Flexible SA – employer is the owner of the account

Health SA – individual owns the account; employers can also contribute to the account

  • Money accessibility

Flexible SA – full access to the plan at any time, regardless of whether they have paid their contributions or not

Health SA – can only access the amount that has been deposited in their accounts

There are still a lot of differences that are not mentioned here, but you can always make your own research from here on. No matter what you choose, select the one that will give you the most benefit.

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