A flexible spending account and a health savings account do the same headline job: they let you pay medical bills with money that was never taxed. Past that, they are different animals. One belongs to your employer’s plan and expires; the other belongs to you and can grow for decades. Which one you can use depends mostly on your health plan, and which one you should use depends on how you spend on care.

Health FSA: use it this year

A health FSA is offered only through an employer, and it works with any kind of health plan; you do not need a particular deductible to qualify. You choose an annual election during open enrollment, the money comes out of your paycheck before income and payroll taxes, and you spend it on deductibles, copays, prescriptions, dental and vision care and other qualified expenses. The full election is typically available on the first day of the plan year even though you fund it paycheck by paycheck, which makes an FSA useful for a known expense early in the year.

For plan years beginning in 2026, the salary-reduction limit is $3,400, up from $3,300 in 2025. The catch is the use-it-or-lose-it rule. Money you have not spent by the end of the plan year is forfeited, and your employer is not permitted to refund it. Plans can soften this in one of two ways, but not both:

  • A grace period of up to two and a half months after the plan year ends, during which you can keep spending last year’s balance.
  • A carryover of unused funds into the next year, capped at $680 for 2026 plan years. The carryover option started at $500 when the IRS created it in 2013 and is now indexed.

Your plan may offer one, the other, or neither; the plan documents say which. Elections generally cannot be changed midyear without a qualifying life event, and the account stays with the employer’s plan if you leave. Plan the election around expenses you are confident you will have.

HSA: keep it for life

An HSA is available only if you are covered by a high-deductible health plan and have no other disqualifying coverage. For 2026 a plan qualifies as an HDHP with a minimum deductible of $1,700 for self-only coverage or $3,400 for family coverage, and an out-of-pocket maximum no higher than $8,500 or $17,000. Employer plans can qualify, individual plans can qualify, and starting January 1, 2026, every bronze and catastrophic plan sold on the ACA marketplace counts as an HDHP for HSA purposes, which opens the account to many people who were shut out before. Whether a high deductible suits you is its own question, covered in How to Use a High Insurance Deductible to Lower Your Premiums.

The 2026 contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 more if you are 55 or older at the end of the year. Contributions are pretax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free: the triple tax break no other account offers. Two features make the HSA fundamentally different from an FSA:

  • Nothing expires. Unused contributions remain in your account until you use them. There is no year-end deadline and no forfeiture.
  • It is yours. The IRS calls the HSA portable: it stays with you if you change employers or leave the workforce. Many HSA custodians let you invest the balance once it passes a threshold, so a healthy year’s contribution can compound for decades toward retirement medical costs.

The 2026 rule changes, including permanent telehealth coverage before the deductible and direct primary care memberships that no longer break eligibility, are covered in HSA Rules Just Changed for 2026.

Can you have both?

Not a general-purpose FSA and an HSA at the same time: a regular health FSA counts as other coverage that disqualifies you from HSA contributions. There are two workarounds.

  • A limited-purpose FSA can sit alongside an HSA. It reimburses dental and vision expenses and preventive care but not general medical bills, so it does not interfere with HSA eligibility. If your employer offers both, you can shelter dental and vision spending in the FSA on top of the HSA limit.
  • Empty the FSA before switching. If your old plan had a grace period, coverage during that grace period blocks HSA contributions unless your FSA balance at the end of the prior plan year was zero. Spend it down before the year ends if you are moving to an HDHP.

Side by side

  • Who can open one: FSA, anyone whose employer offers it, on any health plan. HSA, anyone enrolled in a qualifying HDHP, through an employer or on their own.
  • 2026 limit: FSA $3,400. HSA $4,400 self-only or $8,750 family, plus $1,000 at 55 and up.
  • Unused money: FSA, forfeited except for a grace period or a carryover of up to $680. HSA, rolls over indefinitely.
  • If you change jobs: FSA stays with the employer’s plan. HSA goes with you.
  • Growth: FSA, none. HSA, interest or investments, tax-free.
  • Spending: FSA, full election available at the start of the year. HSA, only what is in the account.

Which one to pick

If your employer offers only an FSA, or your health plan does not meet the HDHP thresholds, the FSA is your tool: elect what you will reliably spend, and check whether the plan has a grace period or a carryover before you round up. If you have or can choose an HDHP, the HSA is the stronger account by every measure except day-one spending, and it doubles as a retirement account for medical costs. If your employer offers a limited-purpose FSA alongside the HSA, use both: dental and vision from the FSA, everything else from the HSA, and let the HSA balance grow. Either way the money is pretax and the bills are real; the mistake is leaving the account unopened.