HSA vs. FSA: Know Before You Enroll

When it comes to saving on healthcare costs, Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are two powerful tools. But what’s the difference between them – and which one is right for you and your employees?

Let’s walk through the key features for each, so you can make an informed decision.

What They Have in Common

Both HSAs and FSAs let you set aside money before taxes to pay for qualified medical expenses – think co-pays, prescriptions, dental visits, and even glasses. Because the money is tax-free, you’re saving a percentage of every dollar you contribute. That’s a win.

But there are some important differences between the two.

What Is an HSA?

An HSA (Health Savings Account) is available only if you have a high-deductible health plan (HDHP). It’s designed to help you save for current and future medical expenses – and it comes with some serious tax advantages:

  • Contributions are tax-deductible
  • Funds grow tax-free
  • Withdrawals for medical expenses are tax-free

Plus, the money in your HSA rolls over year to year, and it’s yours to keep, even if you change jobs or retire.

What Is an FSA?

A Flexible Spending Account (FSA) is usually offered through your employer as part of a benefits package. You can use it for qualified out-of-pocket healthcare costs, and your contributions are made pre-tax, lowering your taxable income.

Here’s the catch: FSAs are “use it or lose it.” In most cases, you have to spend the money by the end of the plan year – or risk losing what’s left. Some employers offer a short grace period or allow a small amount to roll over (up to $640 in 2025), but it’s still more restrictive than an HSA.

Key Differences 

  • Eligibility: You must be enrolled in a high-deductible (HDHP) to open an HSA. FSAs, on the other hand, are available through your most employer-sponsored plans and do not require a specific type of health insurance.
  • Contribution Limits: In 2025, HSA contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 allowed if you’re 55 or older. For FSAs, the limit is $3,300 per year.
  • Ownership: HSAs are owned by you, meaning you control the funds and keep the account even if you leave your job. FSAs are owned by your employer, and the money usually stays behind if you change jobs.
  • Investment Options: Many HSA providers allow you to invest unused funds, much like a retirement account. FSAs do not offer investment options – they’re meant for short-term spending.

So, Which One’s Better?

That depends on your situation:

  • If you have a high-deductible health plan and want to build long-term savings, an HSA might be the way to go.
  • If your employer offers an FSA and you expect to have predictable costs (like prescriptions or therapy visits), it can still save you money.

And if you’re an employer? Offering one or both can give your team valuable options while also providing tax benefits to your business.

The Bottom Line

Both HSAs and FSAs are powerful, tax-advantaged tools that can enhance your employee benefits package — but choosing the right option starts with understanding your team’s needs and the structure of your health plan.

If you’re offering a high-deductible health plan (HDHP), pairing it with an HSA can provide employees with a long-term savings option that grows tax-free and offers flexibility. For more traditional plans or employees with consistent healthcare expenses, an FSA can offer immediate, upfront savings without the HDHP requirement.

The key is aligning these choices with your broader benefits strategy — balancing cost-efficiency for your business with meaningful value for your team.

At Broussard Poché, we work with employers to design benefit offerings that attract talent, support retention, and contribute to long-term financial health — for both the company and its people.

To learn more about saving on healthcare costs, visit broussardpoche.com.

About Brossard Poche 

Broussard Poché, LLP is a trusted certified public accounting firm serving Lafayette, New Iberia, and Crowley, Louisiana. With decades of experience, we provide individuals and businesses with expert services in tax, audit, financial planning, and business consulting. Known for our deep client relationships and proactive approach, we’re committed to guiding clients through life’s major financial decisions while fostering a culture of collaboration, career growth, and community trust.