Open Enrollment: HSA or FSA? A Plain Comparison

• 1. Who can use each
• 2. What happens to unused money
• 3. Tax treatment
• 4. How to choose a number
• 5. Keep the receipts
• Free tools

In the US, open enrollment season is when many people pick between a health savings account (HSA) and a flexible spending account (FSA). They sound alike but work differently.

§1. Who can use each

• HSA: only with a qualifying high-deductible health plan (HDHP).
• Health FSA: offered by an employer, usually with any plan type.

§2. What happens to unused money

• HSA: the money is yours and rolls over every year, even if you change jobs. Many HSAs let you invest the balance.
• FSA: mostly “use it or lose it”. Some plans allow a small carryover or a grace period, but not both.

§3. Tax treatment

Both are paid with pre-tax money for qualified medical costs. An HSA adds tax-free growth and tax-free withdrawals for qualified medical costs, with no deadline to reimburse yourself as long as you keep the receipts.

§4. How to choose a number

• FSA: add up predictable costs only: prescriptions, planned dental work, glasses, regular therapy visits. Don’t guess high.
• HSA: start with enough to cover the deductible over time, then consider more if you can afford it.

§5. Keep the receipts

Save every receipt with the date, provider and amount. For an HSA, old receipts can be reimbursed years later. For an FSA, they’re needed if a claim is reviewed.

§Free tools

• Health insurance plan comparison spreadsheet (free CSV): https://smartbudgetsheets.surge.sh/templates/health-insurance-plan-comparison-spreadsheet/?utm_source=nostr
• HSA medical expense tracker (free CSV): https://smartbudgetsheets.surge.sh/templates/hsa-medical-expense-tracker-spreadsheet/?utm_source=nostr
• 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr

General information, not tax advice. Check the current IRS limits and your plan documents.