What is the difference between an HSA and an FSA?

A health savings account requires enrollment in a qualifying high-deductible health plan. Contributions are tax-deductible, growth is untaxed, and withdrawals for qualified medical expenses are untaxed, which is why it is described as triple tax advantaged and why it is often the most efficient account in the tax code. The balance is yours permanently, rolls over indefinitely, moves with you between jobs, and can typically be invested rather than sitting in cash. After 65, withdrawals for non-medical purposes are taxed as ordinary income without penalty, which makes it function as a supplemental retirement account.

A flexible spending account is employer-established, does not require a particular health plan, and is fundamentally use-it-or-lose-it, with employers permitted to offer either a modest carryover or a short grace period but not both. It belongs to the employer, so leaving the job generally forfeits the remaining balance. One quirk works in your favor: the full annual FSA election is available on day one, before you have contributed it, and if you leave mid-year having spent more than you contributed, you generally do not repay it. Contribution limits differ and are adjusted annually by the IRS. The practical guidance: if you are on a qualifying high-deductible plan, fund the HSA and, if cash flow allows, pay current medical costs out of pocket while letting the balance invest, keeping receipts to reimburse yourself tax-free years later.