COMPARISON OF HSA and FSA
Considerations
Owned by
Contributions made to
account by:
Requirements to open an
account:
Interactions with other plans
Maximum Contributions/
Year
Health Savings Account
(HSA)
Individual
- Employer contributions
- Payroll deductions (individual)
- From bank account (individual)
- Lumps sums, etc. (individual)
Yes.
To be an eligible individual, you must meet the
following requirements:
- Must be covered by a qualified
HDHP ***
- Cannot be covered by other
insurance coverage
- May not be entitled to Medicare
benefits
- May not be claimed as a dependent
on someone else’s tax return
Can have an HSA with:
FSA and/or HRA (limitations) *
IRS limits for 2011:
- $3,050 for single coverage
- $6,150 for family coverage
Note: Maximums can be attained regardless of when
you enroll
(i.e., mid-year)
Flexible Spending Account
(FSA)
Employer
Typically: Employee (payroll deductions)
Optional: Employer contributions
None.
Employers have complete flexibility to offer various
combinations of benefits in designing their plan. You do not
have to be covered under any other health care plan to
participate.
Note: Self-employed persons are not
eligible for an HRA
Can have an FSA with:
HRA
Can have an FSA with:
HSA (limitations) *
Health FSA: There is no limit on the amount of money an
employee or employer can contribute to the plan; however, the
plan must prescribe either a maximum dollar amount or
maximum percentage of compensation that can be contributed
to a health FSA.
Dependent Care FSA: $5,000 in 2011
(certain limits apply)**
Change contribution during
the year
Anytime
Note: Employer can choose to set a lower limit.
Only if there is a change in your employment or family status
this is
specified by the plan
Considerations
Health Savings Account
(HSA)
Flexible Spending Account
(FSA)
Contributions
Deposits taxable?
Amount that can
be withdrawn for eligible
expenses
Contributions made by an employer are not included
as income. Contributions to an employee’s account
by an employer using the amount of an employee’s
salary reduction through a cafeteria plan are treated
as employer contributions. Contributions to an HSA
must be made in cash/check. Contributions of stock
or property are not allowed.
Up to the amount deposited
in to the account
Can money in account
earn interest?
Can money in account be
invested?
Yes. Earnings on amounts in an HSA are not
included in your income while held in the HSA
Yes
Balance in account at the
end of the year?
You are permitted to take a distribution from your
account at any time; however, only those amounts
used exclusively to pay for qualified medical
expenses are tax free. Amounts that remain at the
end of the year are generally carried over to the next
year.
Money can be used by
code-eligible dependents:
- Qualifying child
- Qualifying relative
Deposits are made by an employer on a before-tax basis.
These contributions are not included in the employee’s income.
Employees do not pay federal income taxes or employment
taxes on amounts contributed to the account.
Up to the total amount elected from your effective date through
the end of the plan year; regardless of how much is your
account when you make your request
Note: Must provide a written statement that the expenses has
not been paid or reimbursed under any other health plan
coverage.
No
No
Account Balance
At death
Portable
(i.e., take it with
you when you
when you change
companies)
Yes
Use it or lose it; however, there can be up to a 2 ½ month
grace period at the end of the year. The employer is not
permitted to refund any part of the balance to the employee.
The account can only be used to reimburse qualified medical
expenses
Money can be used by eligible dependents up to the amount in
the account until the end of the plan year.
Not portable. Only eligible expenses incurred while covered
under that health plan will be eligible for reimbursement.
Unused money will be forfeited to the employer
* An HSA can be combined with an FSA or HRA based on the following circumstances:


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Limited-purpose FSA or HRA. These arrangements can pay or reimburse eligible expenses, except long-term care. Also, these
arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible.
Suspended HRA (i.e., before the beginning of an HRA coverage period, you can elect to suspend the HRA). You can contribute to an
HSA as long as your HRA is suspended. When the suspension period ends, you are no longer eligible to make contributions to an
HSA.
Post-deductible FSA or HRA. These arrangements do not pay or reimburse any medical expenses incurred before the minimum annual
deductible is met. The deductible for these arrangements does not have to be the same as the deductible for the HDHP, but benefits
may not be provided before the minimum annual deductible is met.
Retirement HRA. This arrangement pays or reimburses only those medical expenses incurred after retirement. After retirement you are
no longer eligible to make contributions to an HSA.
**The following limits also apply to the dependent care spending account:
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
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if you are married and file a joint tax return, you and your spouse may contribute only a combined total of $5,000,
if you are married and file separately, you and your spouse may contribute only $2,500 each,
if you are married and your spouse earns less than $5,000, you cannot be reimbursed for more than your spouse’s earned income
(unless your spouse is disabled or a full-time student), and
if you are married and your spouse is disabled or a full-time student, he or she will be treated as earning $250 each month ($500 if
you are caring for two or more dependents, including your spouse).
*** A High-deductible Health Plan (HDHP) requires:

a deductible of at least (2011):
o $1,200 for single coverage
o $2,400 for family coverage

an out-of-pocket maximum of no more than (2011):
o $5,950 for single coverage
o $11,900 for family coverage

no costs covered (except routine, preventive care and preventive drugs) before the deductible is met