Many people wonder if they should open an FSA or an HSA. The debate of HSA vs. FSA is dependent on your circumstances. They both have their own advantages and disadvantages, but which one is right for you? We’ll help you figure it out in this blog.

What Are You Eligible For?

The first question you have to ask when choosing HSA vs. FSA is which one you’re eligible for. Here are the eligibility requirements for each:

FSA Eligibility

• It must be established through an employer.
• You don’t need a high-deductible insurance plan to get one.
• You can’t open one if you’re self-employed.

HSA Eligibility

• You must be enrolled in an HSA-eligible high-deductible insurance plan.
• You don’t need an employer to have an HSA.

Once you determine your eligibility, you’ll want to look at the rollover restrictions.

Rollover

When it comes to rollover funds, HSA has more flexibility.

FSA Rollover

• Unused funds do not roll over into the next period. Some employers allow a grace period or carryover limit, but you won’t get your full amount in most cases if you don’t use it.

HSA Rollover

• All of your money rolls over and is not tied to your job or if you get a new insurance plan.

Accessing Your Money

When it comes to accessing your money, FSA gives you some more flexibility.

FSA Access

• Your full FSA amount is available at the beginning of the period, regardless of how much you’ve put in.

HSA Access

• You have access to the money you’ve put in.

Contribution Amount

When it comes to your contribution amount flexibility, HSAs have the advantage.

FSA Contributions

• The contribution amount is chosen during open enrollment or during qualifying life events and can’t be changed outside of these periods.

HSA Contributions

• You can change your contribution amount at any time, and anyone can contribute to your HSA if you choose.

Who Owns the Account

When it comes to who is in charge of the accounts, HSAs give you more autonomy and control.

FSA Accounts

• Employers own the account and any unused funds.

HSA Accounts

• It’s your money, and there are no time limits on it.

HSA vs. FSA, Which Is Right for Me?

When it comes to choosing HSA vs. FSA, the choice will depend on what you want out of a savings account for medical expenses. If you want more flexibility and control, an HSA is generally advised, but an FSA can sometimes be easier if your employer offers it. Keep in mind, another big advantage of an HSA is that it also works as a retirement account after age 65 and can be passed on. If you want to open an HSA or FSA, make sure to go with an option that gives you plenty of flexibility and allows you to make the most of your savings.

Read a similar blog about healthcare trends here at this page.