The main difference between a flexible spending account (FSA) and a health savings account (HSA) is that the former remains active by a person and allows contributions to be rolled over, whereas FSAs are less flexible and are managed by an employer. Employers hold FSA, and any unused money must be returned to them at the end of the year or when an employee quits their job. HSA is held by the customer or employees, any funds given to the account, whether by the customer or their employer are there to be retained forever.
FSA Vs HSA | Difference between FSA and HSA
Eligibility requirement
Eligibility must be offered by your employer while using FSA, but in HSA must have a high-deductible health plan.
Contribution limit
FSA has lower contribution limits, spouses can contribute to their own employers' sponsored FSA if available, only $2,850 for health FSA and $5000 for dependant care FSA. \
HSA has higher contribution limits, including the option to double contributions for families, $3650 for self only, and $7300 for family coverage.
Changing contribution amount
FSA contributions are typically established once elected at the start of the year unless a qualifying event occurs.
You can alter your HSA contribution amount at any time during the year.
Taxes
In FSA, Contributions are pretax and distribution is tax-free and can only be used for eligible medical expenses. FSA are considered salary deferrals.
But in HSA contributions are pretax as they are considered salary pretax and the distributions are tax-free and can only used for eligible medical expenses.
Roll over
In most cases FSA, You forfeit any unused balance unless your employer allows a rollover, which was capped at $570 in 2022, and it will be capped at $610 in 2023. However, unused HSA balances are carried forward into the following year.
Employee contribution
When you move jobs, you will most likely lose your FSA benefits. Employees can donate up to $500, regardless of whether they contribute. Employees can only match another employee's donation dollar for dollar.
The employer may contribute any amount to an employee's HSA; however, the employee and employee's total combined contribution for the year cannot exceed $3650 for self-only coverage or $7300 for family coverage.
Transferability
While using an FSA the account is forfeited after a job change unless you elect COBRA continuation health coverage within 6 days of switching jobs, but on HSA employees keep the account regardless of if they change jobs.
Access to Money
The start of the financial year. An employee can view their yearly election at any time, whether or not they contributed the amount that is required. This one is the skill of accessing the money in FSA.
While using iof HSA as the employees to their plan. An employee can only access what has been placed into their HSA account.