| Type of Account | An employer-sponsored benefit account. | An individual or family-owned savings account. |
| Eligibility | Offered by employers, and employees can participate if the employer provides this benefit. | Available to individuals or families who have a qualified High Deductible Health Plan (HDHP). |
| Contribution Limits | Contributions are set by the employer, and there is an annual limit set by the IRS (subject to change). | Contributions are set by the individual or employer, up to IRS-defined annual limits (subject to change). |
| Tax Advantages | Contributions are pre-tax, reducing taxable income, and withdrawals for qualified medical expenses are tax-free. | Contributions are tax-deductible or made with pre-tax dollars, and withdrawals for qualified medical expenses are tax-free. |
| Ownership | FSAs are typically owned and administered by the employer. | HSAs are owned by the individual or family, allowing for portability even if the individual changes jobs. |
| Rollover of Funds | Generally, unused funds at the end of the plan year may be forfeited ("use it or lose it"), with some exceptions like a carryover of up to $550 or a grace period. | Funds can roll over year-to-year indefinitely, allowing for long-term savings and investment growth. |
| Investment Options | Typically, FSAs do not offer investment options. | HSAs often provide investment opportunities, allowing account holders to invest in mutual funds, stocks, and other assets. |
| Access to Funds | Funds are accessible immediately, even if the full annual contribution has not yet been deposited. | Funds are accessible as they are contributed, but some HSAs require a minimum balance before investing. |
| Account Portability | FSAs are generally not portable if an employee changes jobs. Funds remain with the employer. | HSAs are portable and belong to the individual, allowing them to keep the account and funds when changing jobs or retiring. |
| Qualified Medical Expenses | Funds can be used for IRS-defined qualified medical expenses, such as doctor visits, prescription drugs, and some over-the-counter items. | Funds can be used for IRS-defined qualified medical expenses, including a broader range of items and services, often with greater flexibility. |
| Retirement Savings Component | FSAs do not have a retirement savings component. | HSAs can serve as both a healthcare savings and retirement savings account, with tax advantages for both purposes. |
| Account Closure Upon Medicare Eligibility | An FSA can no longer receive contributions upon the account holder's enrollment in Medicare, but existing funds can still be used for qualified medical expenses. | An HSA can still receive contributions and be used for qualified medical expenses after the account holder enrolls in Medicare, but additional contributions may be limited. |
