A Q and A on HSAs and FSAs
HSAs and FSAs: straight answers to the questions people actually ask, with the figures behind them.
Tax-advantaged accounts that let you set aside money for medical costs: a Health Savings Account (HSA) or a Flexible Spending Account (FSA).
Key takeaways
- HSA eligibility: requires an HSA-eligible high-deductible health plan
- HSA money: is yours, rolls over every year and stays with you if you change jobs
- Most useful single change: Estimate predictable costs, such as glasses, prescriptions and copays, before choosing an FSA amount.
- Commonest mistake: Putting more into an FSA than you are likely to spend.
- See a doctor if any of the signs under "When to speak to a doctor" below apply to you.
What is HSAs and FSAs?
Tax-advantaged accounts that let you set aside money for medical costs: a Health Savings Account (HSA) or a Flexible Spending Account (FSA).
Why does it matter?
Used well, they lower the real cost of care, but the rules differ and FSA money can be lost if it is not spent in time.
HSA eligibility for HSAs and FSAs?
Requires an HSA-eligible high-deductible health plan.
HSA money for HSAs and FSAs?
Is yours, rolls over every year and stays with you if you change jobs.
FSA money for HSAs and FSAs?
Is set up through an employer and is generally use-it-or-lose-it, though some plans allow a grace period or small carryover.
Contribution limits for HSAs and FSAs?
Set by the IRS and updated each year.
What is the single most useful thing to do?
Estimate predictable costs, such as glasses, prescriptions and copays, before choosing an FSA amount.
What is the most common mistake?
Putting more into an FSA than you are likely to spend.
When should I see a doctor?
Account balances should never decide whether you get urgent care; call 911 for an emergency. Talk with your doctor about lower-cost options if costs are stopping you from following a treatment plan.
More questions, answered
Can I have both an HSA and an FSA?
Generally not a standard FSA, because it counts as other coverage. You can usually pair an HSA with a limited-purpose FSA that covers only dental and vision expenses. Check what your employer offers.
What happens to my HSA if I change jobs?
Your HSA belongs to you, so the money stays with you. You can keep it with the same provider or move it to another one. You can continue to use it for qualified medical expenses even if you are no longer in an HSA-eligible plan.
What happens to my FSA if I leave my job?
You usually lose access to unspent FSA money when you leave, unless you continue it through COBRA. Some people spend remaining funds on eligible items before their last day. Check your plan's rules.
What if I use HSA money for something that is not eligible?
Before 65, non-medical withdrawals are subject to income tax and an additional 20 percent penalty. If it was a mistake, some HSA providers allow you to return the money. Keep records and ask your provider.
Can I use these accounts for over-the-counter medicines?
Yes. Many over-the-counter medicines and menstrual care products are eligible without a prescription. Some items, such as certain supplements, may need a letter of medical necessity. Check your account provider's rules.
Do HSA balances expire?
No. HSA money rolls over every year and remains yours. There is no deadline to spend it, which is a key difference from an FSA.
Related topics
- What the Guidance Really Says About Dual Eligibility (Medicare and Medicaid)
- What the Guidance Really Says About Benefits and Financial Support (Long-Term Conditions)
- What the Guidance Really Says About Caregivers and Work (Carers)
- The Evidence on Travel Insurance and Healthcare Abroad, Without the Hype (Travel Health)
Where to go next
- HSAs and FSAs: What to Do, in Order
- Myths About HSAs and FSAs, Checked Against the Guidance
- HSAs and FSAs — the reference entry
- Health Insurance: The Complete Guide
- Surprise Medical Bills: Sorting the Evidence From the Noise
- Lowering Prescription Costs: What Published Guidance Supports
When to speak to a doctor
Account balances should never decide whether you get urgent care; call 911 for an emergency. Talk with your doctor about lower-cost options if costs are stopping you from following a treatment plan.
Where this comes from
- HealthCare.gov — Health Savings Account (HSA)
- HealthCare.gov — Flexible Spending Account (FSA)
How this page was put together
Every figure, recommendation and warning above is taken from the guidance named in Where this comes from. Nothing on this page is inferred, summarized or generalized beyond what those bodies publish: where they give a number, it is their number, and where they are silent, so are we. Pages are rebuilt whenever the underlying record changes. Sign-off by a named clinician, where it has happened, is shown at the top of the page along with the date.
Medical disclaimer
This article is general information, not medical advice. It cannot account for your own history, medication or circumstances. Always speak to your doctor, pharmacist or another qualified health professional before making changes that affect your treatment, and never delay seeking medical advice because of something you have read here. In an emergency, call 911.
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