Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are two of the most valuable — and most misunderstood — benefits you can offer alongside your group health plan. Open enrollment is the right time to evaluate whether you’re offering the right tax-advantaged accounts.
Health Savings Account (HSA)
An HSA is available only to employees enrolled in a High Deductible Health Plan (HDHP). Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses.
Key HSA features:
- Funds roll over year to year — no “use it or lose it”
- Employee owns the account; it’s portable if they leave
- Can be invested and used as a retirement health fund
- 2026 contribution limits: $4,300 (individual), $8,550 (family)
Flexible Spending Account (FSA)
An FSA can be offered with any type of health plan. Employees set aside pre-tax dollars for qualified medical expenses, but there’s a catch: most funds must be used within the plan year.
Key FSA features:
- “Use it or lose it” rule (up to $660 rollover allowed in 2026)
- Employer can contribute to FSAs
- Funds are available on day one of the plan year
- 2026 contribution limit: $3,300
Which Is Better?
It depends on your plan design and employee demographics. If you’re offering an HDHP to lower premiums, pairing it with an employer HSA contribution is a powerful way to offset the higher deductible and make the plan more attractive. FSAs work better alongside traditional PPO or HMO plans.
Not sure which makes sense for your group? Talk to Paul — we’ll help you structure benefits that work for both your budget and your employees.