FSA vs. HSA: Which is Best? Plus, a Year-End Spend-Down List

You're staring at your company's open enrollment packet... again. The deadline is looming, and that big question pops up every year: FSA vs HSA? It feels like the same confusing choice every single year, with terms that make your eyes glaze over.

You just want to quickly pick the one that'll meet your needs and save you money without a ton of hassle. Deciding on your FSA vs HSA doesn't have to mean complex financial planning.

It's about knowing your health habits, your budget, and what you expect for the year ahead as well as the long haul. Let's walk through this so you can click "submit" on your benefits form with total confidence.

FSA vs HSA: Which Saves You More Money?

Think of HSAs and FSAs as tools that help you save on healthcare costs. Both let you pay for medical expenses with pre-tax dollars, lowering your taxable income and giving you an instant discount on every dollar you contribute.

A Health Savings Account (HSA) is a personal account available only if you’re enrolled in a High-Deductible Health Plan (HDHP). The funds are yours to keep, roll over year after year, move with you if you change jobs, and can even be invested tax-free for future growth.

A Flexible Spending Account (FSA) is set up through your employer. It’s often called “use it or lose it” because most funds don’t roll over, but you can access your full annual amount immediately, making it useful for predictable healthcare expenses early in the year.

Understanding the Core Differences: A Quick Comparison

Seeing the main features side-by-side can make the choice clearer. Each account has different rules about who can open one, who owns the money, and what happens to the funds at the end of the year. Here are their most important distinctions:

Contribution Limits: How Much Can You Save?

The IRS sets annual limits on how much you can contribute to these health plans. According to Fidelity Investments, in 2026 you can contribute up to $4,400 to an HSA if you have self-only high-deductible health plan (HDHP) coverage, or $8,750 for family coverage.

After age 55, you can add an extra $1,000 as a catch-up contribution. These limits include employer contributions—so if your company adds $500, you can only contribute the remaining amount. Staying within the HSA contribution limits helps you avoid tax penalties.

For a healthcare FSA, the 2026 contribution limit is $3,400 per employee, according to HR Source. If both spouses have FSAs through their employers, each can contribute the maximum.

Employer contributions do not reduce your personal limit. Starting in 2026, employees can roll over up to $680 in unused funds to the next plan year.

How to Decide in Just a Few Minutes

You don't need a fancy spreadsheet to make a good decision. Grab a piece of paper and think through these simple steps.

Step 1: Know Your Numbers

First, pull up this past year's medical spending by reviewing Explanation of Benefits (EOB) statements from your health insurance and receipts from your pharmacy.

Your goal is to get a realistic picture of your annual healthcare needs. Jot down your best guesses for what you will spend in the coming year.

• Premiums: How much is your payroll deduction that comes from each paycheck for your health insurance plan?
• Regular Care: Think about routine doctor visits, prescriptions, PT appointments, and dental cleanings.
• Known Events: Are you planning a surgery, expecting a baby, or getting braces for a child?
• Free Money: Does your employer contribute money to an HSA spending account on your behalf? Factor this in, as it reduces your costs.

Step 2: Figure Out the Real Cost

The monthly premium is only one piece of the puzzle. For each health plan you're considering, add up the numbers to find your "all-in" annual cost. This calculation gives you a much better picture of what you will spend.

Start with your total annual premiums (monthly premium x 12). Add your estimated out-of-pocket costs for the care you expect to need.

Finally, subtract any money your employer contributes to a Health Savings Account HSA and the estimated tax savings from your contributions.

Step 3: Do a Quick Gut Check

Now, be honest with yourself about risk. Could you comfortably cover a surprise $3,000 medical bill in February if you choose a high-deductible plan? 

If the answer is no, health plans with lower, predictable copays might be the better choice for you. 

Also, remember to check your medications. A health insurance plan with a cheap premium might turn out to be expensive if your main prescription isn't on its approved list, known as a drug formulary. It's worth a few minutes to check your medications against each plan option.

Why HSA Health Savings Account Is a Powerful Long-Term Tool 

If you’re eligible for an HSA health savings account, it often provides the best long-term value for both medical expenses and future savings.

Thanks to its triple tax advantage—contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free.

Both HSAs and FSAs cover eligible medical costs, but an HSA offers more flexibility and lasting benefits.

Unlike an FSA, HSA funds roll over every year, letting you build a supplemental retirement fund for health care without the year-end rush to spend it. It’s a health plan and an investment account rolled into one.

HSA Eligibility: Do You Qualify?

To contribute to an HSA, you must meet three specific IRS requirements. First, you must be covered under a high-deductible health plan (HDHP).

For 2025, the Internal Revenue Service (IRS) defines a high-deductible health plan as any plan with an annual deductible of at least $1,650 for an individual or $3,300 for a family.

Second, you cannot have any other health coverage, such as a spouse's non-HDHP plan, Medicare, or Tricare.

Thirdly, you cannot be claimed as a dependent on someone else's tax return. If you meet all three of these criteria, you're eligible for an HSA.

The HSA as a Retirement Tool

The HSA becomes even more flexible once you turn 65. You can continue to use the funds tax-free for qualified medical expenses, which can include Medicare premiums.

This is a significant benefit for retirees on a fixed income. Additionally, after age 65, you can withdraw money from your HSA for any reason without a penalty.

These non-medical withdrawals are simply treated as taxable income, similar to a traditional 401(k) or IRA. This flexibility makes the HSA a valuable part of a comprehensive retirement strategy.

When an FSA Is the Smarter Choice

An HSA health savings account isn’t ideal for everyone. FSA health plans often work better if you prefer a lower deductible and predictable copays. If you expect specific or large medical expenses during the plan year, an FSA can be especially helpful.

One major advantage is immediate access to your full annual FSA contribution. For example, if you elect $2,000, it’s all available on January 1, perfect for early-year costs like glasses or dental work.

The downside is the “use-it-or-lose-it” rule—funds typically must be spent by year’s end. However, some employers offer a small rollover (up to $680 in 2026) or a grace period of 2.5 months, so check with HR for your plan’s details.

Other FSA Account Types

Beyond the standard healthcare FSA, your employer might offer other types.

A Limited Purpose FSA (LPFSA) can be used alongside an HSA. It only covers health reimbursements for eligible dental and vision expenses, allowing you to save your HSA funds for medical costs.

A Dependent Care FSA (DCFSA) is used to pay for work-related care for a qualifying child or adult dependent. This can include expenses for daycare, preschool, or summer camps.

This account has its own contribution limits and rules, separate from a health FSA.

HSAs, FSAs, and Medical Sharing Plans

If you use a medical cost-sharing ministry instead of traditional health insurance, it’s important to understand how it affects your HSA and FSA options.

You generally cannot contribute to an HSA health savings account while participating in a medical sharing plan.

The IRS considers these ministries a form of alternate coverage, making you ineligible to add new HSA funds, even if you also have a high-deductible health plan.

However, an FSA health plan can work alongside a sharing plan. You can use FSA funds for qualified medical expenses not covered by your ministry, but monthly share contributions do not qualify as eligible expenses.

If You Want to Use FSA for Supplements 

In most cases, supplements and vitamins aren’t automatically eligible for Flexible Spending Account (FSA) reimbursement — but there are exceptions.

Supplements can qualify if they’re prescribed to treat a specific diagnosed medical condition, not just for general wellness.

You’ll need a Letter of Medical Necessity or a doctor’s prescription stating that the supplement is required to manage or treat that condition. It must be medically necessary, not simply supportive or preventive.

Supplements are not covered when used for general health, such as a multivitamin “for overall wellness” or fish oil “for heart health,” without a documented diagnosis or physician’s note. To use FSA funds for supplements, make sure you:

• ✅ Have a medical diagnosis from your doctor.

• ✅ Obtain a Letter of Medical Necessity or prescription for the supplement.

• ✅ Keep all receipts and documentation in case of an audit.

A Smart Year-End Flexible Spending Accounts Shopping List

Still have FSA money left this year? Don’t waste it on things you’ll never use. Here’s a list of practical, eligible items that can save you money on everyday essentials you’re likely to buy anyway.

1. Supplements if they fit the above-named criteria.
2. Prescription glasses or contact lenses.
3. A backup supply of contact lens solution.
4. Prescription sunglasses for driving or outdoor activities.
5. Sunscreen with SPF 30+ for your face and body.
6. Lip balm that contains SPF protection.
7. A new first-aid kit for your home, car, or travel bag.
8. A reliable digital thermometer for adults and children.
9. An automatic blood pressure monitor (arm style is more accurate than wrist).
10. A pulse oximeter for checking blood oxygen levels.
11. An electric heating pad for sore muscles or injuries.
12. Reusable cold packs for aches, sprains, and headaches.
13. A TENS unit for electronic nerve stimulation and pain relief.
14. Shoe inserts or orthotics for foot support.
15. A knee, wrist, or ankle brace for joint stability.
16. Graduated compression socks for travel or circulation support.
17. Lubricating or allergy eye drops.
18. Refills on your prescription skin creams or ointments.
19. Over-the-counter acne treatments and products.
20. A year's supply of your preferred allergy medication.
21. Heartburn or acid reflux medicine.
22. Menstrual care products like tampons, pads, or cups.
23. Prenatal vitamins, pregnancy tests, or ovulation test kits.
24. Specialty foot care powders or creams for conditions like athlete's foot.
25. Pill organizers or sharps containers for medication management.
26. Pre-paying for scheduled dental work or a procedure like LASIK eye surgery.

Before shopping, review your plan’s rules. Some over-the-counter items may require a Letter of Medical Necessity from your doctor. Be sure to submit receipts before your plan’s final deadline.

Conclusion

The FSA vs. HSA decision becomes much clearer once you know what to look for.

An HSA health savings account is ideal for long-term savers with a high-deductible plan who want to invest their health care dollars. It’s a powerful way to save for both current medical expenses and future retirement health costs.

An FSA health plan is better for those who prefer predictable expenses and have planned medical costs each year. With immediate access to funds and compatibility with most health insurance plans, it offers flexibility and convenience.

Neither choice is permanent—you can adjust during open enrollment each year. Taking a few minutes to evaluate your needs helps you choose the account that delivers the most savings, security, and peace of mind for your family.

Frequently Asked Questions

1. FSA vs HSA: Which saves more for me this year?

Which plan saves more depends on your goals. A health care FSA offers greater immediate savings for predictable, short-term expenses and day-one access to funds.

If you qualify for an HSA high-deductible health plan (HDHP), an HSA can provide better long-term savings with its triple tax advantage—pre-tax contributions, tax-free growth, and tax-free withdrawals—and no use-it-or-lose-it rule.

2. Can I have an HSA and an FSA at the same time?

You cannot pair an HSA with a general-purpose FSA at the same time. To keep HSA eligibility, use a Limited-Purpose FSA (LPFSA) for dental and vision only.

3. What happens to my FSA or HSA if I change jobs mid-year?

HSA is yours—it’s portable, rolls over, and stays with you (including all invested funds).

FSA is an employer plan—you typically forfeit unused funds when employment ends unless you’re eligible for COBRA or have a plan grace period/rollover (check with HR).

4. Are medical sharing plans compatible with HSAs and FSAs?

If a medical cost-sharing plan is your primary arrangement, you generally cannot contribute to an HSA, as the cost-sharing counts as "other coverage."

You can use a Healthcare FSA for qualified medical expenses, but monthly share fees usually are not reimbursable.

5. Are supplements FSA- or HSA-eligible?

In most cases, supplements—including vitamins, minerals, herbs, and protein powders—aren’t eligible for reimbursement with an FSA or HSA.

They’re only covered if prescribed for a specific diagnosed condition and supported by a doctor’s Letter of Medical Necessity (LMN) or, in some plans, a prescription.

Prenatal vitamins often qualify, but most general wellness products do not. To avoid penalties, confirm eligibility with your plan and keep your LMN and itemized receipts on file.

Knowing the rules of FSA vs HSA can help you make the most of your health care savings.