FSAs vs HSAs: What Are They?

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Acronyms can be confusing. Health care is complex. Acronyms in the health care space can seem like a nightmare—so we’re here to break down one of the more confusing aspects of a health care plan: FSAs versus HSAs.

What do they stand for? What do they do? How are they different? And, most importantly, should you use them?

What do they stand for?
FSA: Flexible Spending Account
HSA: Health Savings Account

What are they?
They’re essentially savings accounts used specifically to pay for qualified health care expenses (copays, deductibles, qualifying prescriptions, and certain medical equipment). You can elect to put your earnings, pre-tax, into these accounts, and use them to pay for your health care expenses throughout the year. Some employers will also contribute to these accounts on behalf of the employee, so be sure to look into your individual plan for complete details.


  • You have full access to your annual contribution at the beginning of the year (i.e. you don't have to wait to accrue the funds)
  • You can only change how much you contribute at open enrollment or when there’s an eligible life change event, meaning, you’ll need to decide at the beginning of the year how much you think you’ll spend on health expenses throughout the course of the year, and therefore what you should contribute to the FSA
  • Although it is up to your employer and your health care plan, you typically lose any unused funds for the year if you don’t use them by a certain deadline
  • Generally speaking, when you leave your employer, you lose the ability to contribute to your FSA


  • You must have a high deductible health plan (HDHP) to be eligible for this benefit
  • You only have access to the money in your savings account as it's contributed (versus the contribution for the entire year upfront)
  • You can change how much you contribute to your health savings account at any time
  • Your unused funds will roll over into the next year
  • If you change jobs, you can take your HSA with you

Should you use them?
If you spend any amount of money on health care expenses throughout the course of the year, it may make sense to contribute to an FSA or HSA account. We specialize in health care, not investments, but suffice it to say, using pre-tax dollars to pay for care can save you money in the long run by reducing your taxable income, and therefore these accounts can be a very cost effective way to pay for your health care needs.

The best news? FSAs and HSAs can both be used to pay for contact lenses, so if you have one of these accounts, consider using those funds when you order.

If you’re having trouble deciding what’s best for you, speak with your health care plan representative—they can help answer any questions related to your specific plan.