HSA vs FSA: Let's get real.

HSA: Health Savings Account

When I first learned about HSAs, someone described it to me as “a savings account for all the annoying medical stuff you don’t want to pay full price for.” It stuck, mostly because it’s true.

You only qualify for an HSA if you’re on a high-deductible health plan (HDHP), which basically means you’re trading lower monthly premiums for a higher amount you pay before insurance kicks in. My cousin did this when she got her first job because the cheaper monthly payment sounded great… until she sprained her ankle playing pickleball. But her HSA helped cover a big chunk of the bill.'

Why people like HSAs:

• Your contributions are pre-tax

• The money grows tax-free

• You can invest your HSA funds once you pass a certain minimum

• And the best part: the money rolls over every year (There’s no deadline. You don’t lose it.)

  
  

A lot of people treat their HSA almost like a second retirement account because of the investment feature and the triple tax advantage. It’s genuinely one of the most flexible tools you get in personal finance.

Best for: People with HDHPs who want long-term savings, people who don’t want to worry about “use it or lose it,” and honestly anyone planning for the reality that none of us stay 22 forever.

FSA: Flexible Spending Account

My first introduction to FSAs was my coworker explaining why she bought $180 worth of bandaids on December 31st. Not because she needed them, but because she forgot she still had money to use in her FSA and didn’t want it to disappear. That story told me everything I needed to know about how FSAs work.

An FSA is similar to an HSA in that it lets you use pre-tax money for medical expenses. The difference is in the rules.

Key things to know:

• It does not require a specific type of insurance plan

• The money is pre-tax, just like an HSA

• But: FSAs are “use it or lose it”

• Your employer might let you roll over a small amount or give you a short grace period, but it’s limited

  
  

Because of that, FSAs are great if you can predict your medical expenses for the year: things like prescriptions, therapy co-pays, regular visits, or glasses/contacts.

Best for: People who like to plan ahead, people with steady medical needs, or people whose employers offer FSA options even without an HDHP.

Quick Side-by-Side Summary

Which One Should You Choose?

If you have a high-deductible health plan and want flexibility, especially long-term, an HSA is typically the more powerful tool.

If you don’t have an HDHP, or if you have predictable medical expenses every year, an FSA works great as long as you’re comfortable planning ahead so you don’t lose unused funds.