| Ownership and Control | Owned and controlled by the individual, who can make contributions and decisions about how to use the funds. | Typically sponsored and owned by an employer, with employee contributions made through payroll deductions. |
| Eligibility | Available to individuals with a high-deductible health plan (HDHP), subject to IRS contribution limits. | Generally available to employees regardless of the type of health insurance plan they have, with employer-specific limits. |
| Contribution Limits | Subject to annual IRS limits for contributions, with catch-up contributions available for those age 55 and older. | Subject to annual IRS limits set by the employer, with no catch-up contributions for older individuals. |
| Rollover of Funds | Funds can roll over from year to year, allowing for the accumulation of savings and investment opportunities. | May allow a limited rollover of up to $550 or a grace period for spending unused funds, depending on the employer's plan design. |
| Investment Options | Typically allows for investment of HSA funds in various financial instruments, potentially generating earnings over time. | Generally does not offer investment options; funds are held in an FSA and do not accrue interest or investment returns. |
| Tax Benefits | Offers triple tax benefits: contributions are tax-deductible, funds grow tax-free, and withdrawals for qualified medical expenses are tax-free. | Offers tax benefits, as contributions are made with pre-tax dollars, reducing an individual's taxable income. Withdrawals for eligible expenses are tax-free. |
| Account Ownership After Leaving Job | Remains owned and controlled by the individual even if they change jobs or health plans, providing continued access to funds. | Typically not portable; if an individual leaves their job, they may lose access to unused FSA funds. |
| Qualified Medical Expenses | Allows funds to be used for a wide range of qualified medical expenses, including deductibles, copayments, prescriptions, and certain preventive care. | Also allows funds to be used for eligible medical expenses, but the list of eligible expenses may vary slightly from an HSA. |
| Use for Non-Medical Expenses | Permits non-medical withdrawals after age 65 without penalty, although regular income tax applies. Non-medical withdrawals before age 65 incur penalties and taxes. | Generally does not allow non-medical withdrawals, and unused funds may be forfeited at the end of the plan year or grace period. |
| Portability | Remains with the individual, allowing them to take their HSA funds with them when changing jobs or health plans. | Typically not portable, and employees may lose access to FSA funds if they change employers. |
| Employer Contributions | Employers may contribute to employees' HSAs, and these contributions are not counted toward the individual's contribution limit. | Employers may contribute to employees' FSAs, but their contributions are typically limited and counted toward the annual contribution limit. |
