What is the practical difference between a Health Savings Account and a Flexible Spending Account? What are the pro's and con's of each, and are there situations where either is best?


To be in a health savings account you must be in a high deductible health plan, but the advantage is that the money rolls over from year to year if you don't use it, but it can only be used for qualified medical expenses.

A flexible spending account has its advantage as well: You can use it for dependent care as well as medical expenses, but it's part of a cafeteria plan and you lose the money that you don't spend by the end of the year (rather than it simply rolling over to the next). Another benefit in a FSA is that if you allocate 200/mo to it, and you need to get surgery in January that costs 2400 dollars and then you lose your job in February, you just got 2400 dollars of surgery for 200 dollars pre-tax :)

In summary: Move to France for real health care :) just kidding

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    Cafeteria plan: A plan that allows employees to choose from a variety of benefits. – Chris W. Rea Apr 5 '10 at 15:15
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    @orokusaki Can you define: 'high deductible health plan'? – C. Ross Apr 5 '10 at 15:26
  • The dependant care account and medical FSA are different accounts. I've never seen the expenses to be interchangeable. – JTP - Apologise to Monica Aug 4 '14 at 1:14
  • @C.Ross / Others for reference — The IRS defines HDHP on Form 8889. Specifically, the plan must have: (1) a minimum annual deductible ($1,300 self-only / $2,600 family for 2015-2017), and (2) a maximum annual out-of-pocket expense ($6,550 self-only / $13,100 family for 2015-2017). The table of annual values is also on the Wikipedia page for high-deductible health plan. – Taylor Edmiston Apr 26 '17 at 22:02

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