Health Insurance

Health Savings Account (HSA) vs. Flexible Spending Account (FSA)

Jacqueline Slobin
Jacqueline Slobin23 Aug 2022

Both health savings accounts (HSA) and flexible spending accounts (FSA) are ways to budget and allocate tax-free money that is used to pay for healthcare expenses. HSAs are only available for people who are covered by high deductible health plans, and money not spent in a given year rolls over to the following year. FSAs are offered by an employer and only $550 of money not spent can roll over to the following year. 

If you are looking for another way to save money on health care expenses, Mira may be a great option for you and your family. For only $45/month, Mira members get access to low-cost urgent care, prescriptions, and lab tests. If you have an HDHP, Mira can help you pay for your medical expenses before you reach your deductible, and if you are considering an FSA, Mira is a way to save money without the risk of losing the money you put in your account at the end of the year. 

Health Savings Account vs. FSA: Key Differences 

Health savings accounts (HSA) and flexible savings accounts (FSA) are both ways that you can set aside money to pay for healthcare expenses. Some expenses that can be covered by money set aside in an FSA or HSA include copayments and coinsurance. There are several important differences between an HSA and FSA, which we outline in the table below. 

Health Savings Account vs. FSA


Health Savings Account (HSA)

Flexible Spending Account (FSA)

Who is eligibleIndividuals with a high-deductible health planIndividuals enrolled in a group health plan by an employer who offers FSA
2021 contribution limitSelf: $3,600 Family: $7,200Self: $2,750
Ownership of accountIndividual and not tied to an employerEmployer and cannot be carried over to a new employer
Money rolloverMoney not used rolls over to following yearOnly $550 can roll over to the following year
Changing contributionsCan change at any time as long as you do not exceed limitsCan only be changed during open enrollment or if there is a change in employment or family situation
Penalty for removing funds from accountCan be taken out of the account for free after age 65. Before age 65, there is a 20% penalty for funds used for nonmedical purpose tax-deductibleEmployees may not be able to use funds for nonmedical expenses depending on the employer.
Tax savingsMoney put in this account is tax deductible or can be contributed from employer pre-taxMoney is contributed pre-tax from employer

Pros & Cons of a Health Savings Account (HSA)

If you have a high-deductible health plan (HDHP), you can qualify for a health savings account. In 2021, plans that have a deductible of at least $1,400 for an individual and $2,800 for a family qualify as an HDHP. Annual out-of-pocket expenses cannot exceed $7,000 for an individual and $14,000 for a family, not including out-of-network services. 

If you have an HDHP, there are several benefits that a health savings account can offer. 

  • Money that is put into the account is either tax-deductible or pre-tax. Before the age of 65, you can use these tax-free savings to pay for medical expenses, and after the age of 65, you can withdraw tax-free savings for any purpose.
  • The money in this account rolls over each year. Therefore, if you did not spend all of the money in your HSA in a given year, you will not lose any of the money and can use it on expenses next year.
  • The contribution limits for HSA are typically greater than FSA limits. The contribution limit is also significantly higher for families.
  • The money put in an HSA can be used to cover a wide range of medical expenses, including prescription medications, dental procedures, eye care, and individual counseling.
  • You can get contributions to the account from your employer, but you will not lose the money saved in the account if you switch jobs.

While there are several benefits of having an HSA, there are some drawbacks as well. 

  • If you decide to take out money from your HSA for non-medical purposes before the age of 65, you will need to pay the income taxes on the money and a 20% penalty.
  • You may need to pay a monthly fee or a fee for each transaction, depending on your HSA.
  • You will need to keep records of your withdrawals in order to prove that they were used for qualified medical expenses.
  • You must have a high deductible health plan to qualify for an HSA, which still requires you to pay the full cost of medical expenses until you meet the deductible of your plan. Even with an HSA, it can be difficult to save money to pay for costly medical procedures before you meet your deductible. If you have a high deductible plan, a Mira membership can help you save money by giving you access to affordable urgent care, prescriptions, and lab tests.
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Pros and Cons of a Flexible Spending Account (FSA) 

If you are covered through an employer-sponsored health plan, you should check with your employer to see if they offer a flexible spending account. 

There are some benefits of having a flexible spending account. 

  • The funds that are put into an FSA are pre-tax; therefore, having an FSA will lower your taxable income.
  • FSAs can be used to cover a variety of medical expenses, including copayments, eye services, dental care, and ambulance fees.

Nonetheless, there are some downsides to flexible spending accounts as well. 

  • If you do not use all of the money in your FSA by the end of the year, only $550 can roll over to the following year. Some employers may give their employees about a two and a half month grace period to use the funds, but if they are not used after this point, they will be given up. Mira is a great way to save on health care costs without the risk of losing the money you don’t spend at the end of the year.
  • Individual flexible spending account contributions are limited to be less than health savings accounts; therefore, the money in your flexible spending account may not cover all of your medical expenses.
  • You will need to keep records of your withdrawals in order to prove that they were used for qualified medical expenses.

HSA and FSA Frequently Asked Questions (FAQs) 

Can I have both an HSA and FSA? 

In most cases, you cannot have both an HSA and FSA. The exception is if your employer offers a limited purpose FSA (LPFSA), which allows you to set aside funds to pay for dental and vision expenses only. 

If you decide to use both an HSA and LPFSA, the money in your LPFSA can be used for services such as contact lenses, eye exams, and teeth cleanings, while the money in your HSA can be used for any other qualifying medical expenses. However, in most cases, individuals will only be eligible for one of the two accounts.

If one account is not sufficient for the amount you spend on health care, Mira is a great option to pay lower rates for urgent care, prescriptions, and lab tests. 

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Can I withdraw money from an HSA or FSA for nonmedical expenses? 

If you have an HSA, you can withdraw pre-tax money from your account for non-medical expenses after the age of 65. If you decide to withdraw money for nonmedical expenses before the age of 65, you will need to pay taxes on that money and a 20% penalty fee. 

If you have an FSA, you will not be granted reimbursement for non-qualifying expenses. 

Can funds from an HSA or FSA be used to cover medical expenses from family members? 

You can use money from both an HSA and FSA to pay for your spouse’s and dependents’ medical expenses, as long as they are not already getting reimbursement for their expenses. In addition, if you have dependents, you may want to see if your employer offers a dependent care FSA. Dependent care FSA can cover summer day camp, before and after school care, and babysitting for children under the age of 13. 

Bottom Line 

Both an HSA and FSA are ways to set aside money that you can use on your health care expenses. Some of the key differences between an HSA and an FSA include the amount of money you can put into the account, whether money rolls over each year, who qualifies for the account, and when contributions to the accounts can change. Both accounts can cover medical expenses for spouses and dependents, and in most cases, you cannot have both accounts at the same time. 

Mira is another great way to save money on your health care expenses. For only $45/month, Mira members can access low-cost medical services, such as urgent care visits, prescription medication, and lab tests. Mira can be a fit for you if your HSA and FSA are not enough to cover your medical expenses or if you are looking for an alternative to these accounts. 

Jacqueline Slobin

Jacqueline graduated from the University of Virginia in 2021 with a B.A. in Global Public Health and is a current M.D. candidate at the Icahn School of Medicine at Mount Sinai. Jacqueline has been working for Mira since April 2020 and is passionate about the intersection of public health and medical care.