Plan comparison

FSA vs HSA

Side-by-side comparison

Pre-tax accounts like Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are powerful tools to save money on healthcare expenses, but they work in different ways. This table highlights the key features of each so you can choose the one that fits your needs

Feature

Healthcare FSA (HCFSA)

Health Savings Accounts (HSA)

Eligibility

Available through employer-sponsored plans

Requires enrollment in a high-deductible health plan (HDHP)

Contribution limit

Set annually and subject to IRS guidelines

Higher contribution limits than FSAs, also set by the IRS

Tax advantages

Contributions reduce taxable income

Contributions reduce taxable income and invested account balance grows tax-free

Qualified expenses

Covers medical, dental, and vision expenses

Covers a wide range of expenses and allows saving for future needs

Investment options

Not designed for investment purposes

Offers investment opportunities to grow unused funds over time

Portability

Linked to the employer; generally stays with the plan

Fully portable and remains with the account holder regardless of employment changes

Rollover rules

Allows limited rollover or requires spending within the plan year

No limits on rollover; balances continue to grow year to year

Employer contribution

Employers may contribute to the account, though this varies by plan and is less common

Employers can contribute directly to your account

Mid-year changes

Contribution changes allowed only with a qualifying event

Contributions can be adjusted throughout the year as needed

Age limits

Available at any age while employed

Contributions stop once enrolled in Medicare, but balances remain available

Withdrawal rules

Used exclusively for eligible healthcare expenses

After age 65, funds can also be withdrawn for non-medical expenses, subject to taxes

Account compatibility

Cannot be paired with an HSA

Works well with a Limited Purpose FSA for dental and vision expenses

Dependent coverage

Covers eligible medical expenses for spouse and dependents

Reimbursement process

Use your Malloy Banks payment card for direct payment or submit claims for reimbursement

FSA

What you should know about FSAs

01

Employer-sponsored

FSAs are only available through employers, and you must choose your annual contribution during open enrollment. Changes are generally allowed only if you experience a qualifying life event (e.g., marriage, having a child)

02

Pre-tax savings

Contributions to a Healthcare FSA are deducted from your paycheck before taxes, reducing your taxable income and saving you money on healthcare expenses

03

Use-it-or-lose-it rule

Most Healthcare FSAs require you to spend the funds by the end of the plan year, or you risk forfeiting them. Some plans offer limited carryover or a grace period to extend spending, but unused funds are typically lost

HSA

What you should know about HSAs

01

Triple tax advantage

Contributions are pre-tax, funds grow tax-free, and withdrawals for qualified medical expenses are tax-free in most states

02

Funds roll over

HSA funds never expire, making them ideal for both immediate healthcare costs and long-term savings

03

Investment options

HSA contributions can be invested, allowing funds to grow over time and serve as a supplemental retirement account for future use

Comparing FSAs and HSAs

Side-by-side comparison

What you should know about FSAs

01

Employer-sponsored

02

Pre-tax savings

03

Use-it-or-lose-it rule

Who are healthcare FSAs for?

What you should know about HSAs

01

Triple tax advantage

02

Funds roll over

03

Investment options

Who are healthcare HSAs for?