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FSAs and HSAs: Know the Differences


Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are tax-favored health plans that enable people to save money to pay for medically related expenses.

Both FSAs and HSAs operate like a personal savings account. However, the money in these accounts can only be used for eligible medical expenses — such as copays, deductibles, prescriptions and certain medical equipment. Contributions to both plans are not subject to federal — or typically state — payroll taxes, resulting in tax savings for plan sponsors and participants.

Employers can generally offer an FSA and an HSA, but employees cannot enroll in the two simultaneously. They must select one. Also, employers do not have to contribute to an FSA or HSA, but they can if they want to.

Below are some differences between the two plans, including eligibility requirements, contribution limits, account ownership and rollover options.

Eligibility requirements


Must be established by an employer. Contributions cannot be made otherwise. Employees can enroll in the plan, regardless of whether they have a High Deductible Health Plan (HDHP) or not.


Can be established by an employer or an individual, including a self-employed person. Must be offered in conjunction with an HDHP. In other words, employees who opt for an HSA must also have an HDHP.

Employees with an HSA cannot concurrently contribute to an FSA, but they can have a Limited-Purpose FSA (LPFSA) and an HSA at the same time. An LPFSA lacks the broad coverage of an FSA and can only be used for qualified dental and vision expenses. This can get complicated, so consult a professional about the strict limits on concurrent usage.

Contribution limits

FSA: For 2022, the limit is $2,850.

HSA: For 2022, the limit is $3,650 for self-only coverage and $7,300 for family coverage.

Account ownership

FSA: The employer owns the plan. If a plan participant changes jobs, he or she cannot take the account with him or her. Unused funds left over at the end of the year belong to the employer, not the employee.

HSA: The account stays with the employee, even if it was established by the employer. Therefore, if a plan participant leaves your company, the HSA goes with him or her.

Rollover options


There is a special rule for 2022: 100% rollovers and a 12-month grace period. But unless there are other changes out of Washington, this is a one-time bonus for 2022. It is unclear what account holders will be able to rollover into 2023.


Any funds left in an account at the end of the plan year are rolled over into the next year.

Are you considering offering an FSA or HSA? If so, speak with an employee benefits expert who can help you choose the right plan(s) for your business.


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Scott Johnson
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