Home/Calculators/HSA vs FSA
Both cut your taxable income by the same amount. The difference is what happens to money you don’t spend, and that difference is worth more than the tax break.
What you'll need
What you would put in over a year, and roughly what you expect to spend on care.
What you get
Which account nets you more after tax, how much of an FSA election you would forfeit, and what the leftover becomes if you leave it invested.
Capped at each account’s legal limit in the results below.
The tax break is identical. Both accounts come out of your pay before income tax, and both dodge FICA if they run through payroll. So the tax line is a wash at equal contributions.
What differs is the downside. Unspent HSA money is yours forever: it rolls over, it’s portable when you change jobs, it can be invested, and at 65 it stops carrying a penalty for non-medical use. Unspent FSA money above the carryover goes back to your employer on 31 December. That asymmetry, not the tax rate, is what should decide this.
Two points in the FSA’s favor: it doesn’t require a high-deductible plan, and the entire year’s election is available to you on 1 January, so it can fund a known January expense that an HSA couldn’t cover yet.
This is the most commonly misstated rule in benefits, and it’s worth getting exactly right.
| Withdrawal | Before 65 | 65 and after |
|---|---|---|
| Qualified medical expense | Tax-free | Tax-free |
| Anything else | Income tax + 20% penalty | Income tax, no penalty |
People often hear that an HSA becomes “tax-free for anything” at 65. It doesn’t. What disappears is the 20% penalty. Ordinary income tax still applies to non-medical withdrawals. In practice that means an HSA turns into a traditional 401(k) at 65, while staying completely tax-free for medical costs forever. That’s still the best treatment of any account in the tax code, but it isn’t unlimited tax-free money.
The same removal of the penalty applies if you become disabled, or to your estate, at any age.
Medicare ends contributions, not the account. From the first month you’re enrolled in Medicare your HSA contribution limit is zero. You keep the balance and can spend it tax-free on qualified expenses, including Medicare premiums, but you can no longer pay into it. If you’re approaching 65 and still working, that changes how much you can put in this year.
There is no deadline to reimburse yourself. A qualified expense incurred after your HSA was opened can be reimbursed from it years later, as long as you never deducted it elsewhere or had it paid another way. Some people deliberately pay medical bills out of pocket, keep the receipts, and let the HSA balance grow invested, then reimburse themselves tax-free much later. Nothing about that requires you to spend the account in the year you incur the cost.
Distribution rules: IRS Publication 969. Checked 27 July 2026.
| Limit | Self-only | Family |
|---|---|---|
| HSA contribution | $4,500 | $9,000 |
| HSA catch-up, age 55+ | $1,000 | $1,000 |
| HDHP minimum deductible | $1,750 | $3,500 |
| HDHP out-of-pocket max | $8,700 | $17,400 |
| Health FSA contribution (2026; 2027 not yet announced) | $3,400 | $3,400 |
| FSA carryover into next year | $680 | $680 |
HSA and HDHP figures: IRS Rev. Proc. 2026-24. FSA figures: IRS Rev. Proc. 2025-32. The 2027 health FSA limit had not been published as of 27 July 2026; this tool uses the 2026 figure and will be updated when the IRS announces.
Tax saved is your contribution multiplied by your combined marginal rate: federal, plus state, plus 7.65% FICA if the money is deducted from your paycheck under a cafeteria plan.
FSA forfeiture is your contribution minus what you actually spend, minus the carryover your plan allows, floored at zero. Employers may offer a carryover or a 2½-month grace period, never both, and some offer neither. Check your plan documents.
The HSA figure adds any employer contribution, because that is money you receive either way. Employer contributions count against the same IRS limit as yours.
California and New Jersey tax HSA contributions at the state level, even though the federal deduction applies. If you live in either, set the state rate to 0 for the HSA to see the honest comparison.
A general-purpose health FSA blocks HSA contributions, including your spouse’s FSA. If you want to fund an HSA, the FSA usually has to be a limited-purpose one covering dental and vision only.
HSA figures are the 2027 limits from Rev. Proc. 2026-24. FSA figures are 2026, from Rev. Proc. 2025-32; the IRS normally publishes the 2027 FSA limit in October and we will change it here when it does.
| HSA | FSA | |
|---|---|---|
| Who sets it up | You can open one yourself at a bank or broker, or take the one your employer offers. Either way it is your account. | Only your employer. There is no way to open an FSA on your own. |
| What it requires | A qualifying high deductible plan. For 2027 that means a deductible of at least $1,750 self-only or $3,500 family, and an out-of-pocket maximum no higher than $8,700 or $17,400. | Nothing about your health plan. If your employer offers one, you can elect it. |
| Who owns the money | You do. It follows you between jobs, health plans and providers, and nobody can take it back. | Your employer holds it. You have a claim on it for as long as you work there. |
| Contribution limit | 2027: $4,500 self-only, $9,000 family. Anything your employer contributes counts against that same limit. | 2026: $3,400. The 2027 figure is normally published in October. The limit is per employee, so two working spouses can each elect the full amount. |
| Catch-up | An extra $1,000 from age 55, not 50. Set by statute and never adjusted for inflation. | None. |
| Changing what you put in | Any time, for any reason, up to the annual limit. | Only at open enrollment, or after a qualifying life event such as marriage, divorce, a birth, or a change in employment. |
| Money available up front | Only what has actually been deposited so far. | Your entire annual election from day one of the plan year, even though you have contributed a fraction of it. This is the FSA's single real advantage. |
| At the end of the year | Everything rolls over. There is no deadline, ever. | You forfeit what is left, unless your employer offers a carryover (up to $680 for 2026) or a grace period of up to 2½ extra months. An employer may offer one or the other, not both. |
| If you leave your job | It comes with you, untouched. | It ends, usually on your last day. You may get a short run-out window to submit claims for expenses already incurred. |
| Tax treatment | Untaxed going in, untaxed as it grows, untaxed coming out for qualified expenses. Contributed through payroll it usually escapes payroll tax too. | Untaxed going in, untaxed coming out for qualified expenses. There is no growth to tax. |
| Taking money out for something else | Income tax, plus a 20% additional tax. From age 65 the 20% disappears. The income tax does not. | The plan simply will not reimburse it. |
| Investing it | Most providers let you invest above a cash minimum, and the growth is untaxed. This is where the real value is. | No. It is a spending account, not a savings account. |
| Having both | A general-purpose health FSA disqualifies you from contributing, including one your spouse holds that covers you. | A limited-purpose FSA, restricted to dental and vision, can sit alongside an HSA. A general-purpose one cannot. |
A dependent care FSA is a different account with its own rules and its own limit, raised to $7,500 for 2026. It pays for childcare and elder care, not medical bills, and it has no effect on whether you can contribute to an HSA.
Compare two or three plans by total annual cost and find the break-even point.
What continuing your old plan really costs at 102% of the full premium.
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