Flexible Savings Accounts (FSA) and Health Savings Accounts (HSA) help you save for qualified medical expenses. However, the two vary in terms of benefits and eligibility.
Which account is right for you?
Health Savings Account (HSA)
When you are enrolled in a Qualified High Deductible Health Plan (QHDHP) and meet the eligibility requirements, the IRS allows you to open and contribute to an HSA. [Company Name] offers two QHDHP options, HDHP Level 1 with a $1,800 deductible and HDHP Level 2 with a $3,500 deductible for the 2026 plan year.
HealthEquity will continue to administer and maintain the HSA bank account for [Company Name] employees.
What is a Health Savings Account (HSA)?
An HSA is a tax-sheltered bank account that you own to pay for eligible health care expenses for you and/or your eligible dependents for current or future healthcare needs. The Health Savings Account (HSA) is yours to keep, even if you change jobs or medical plans. There is no "use it or lose it" rule; your balance carries over year to year.
You get extra tax advantages with an HSA because:
- Money you deposit into an HSA is exempt from federal income taxes
- Interest in your account grows tax free; and
- You don't pay income taxes on withdrawals used to pay for eligible health expenses
- You also have a choice of investment options so your unused funds grow over time
Are you eligible to open a Health Savings Account (HSA)?
Although everyone can enroll in the Qualified High Deductible Health Plan, not everyone is eligible to open and contribute to an HSA. If you do not meet these requirements, you cannot open an HSA.
- You must be enrolled in a Qualified High Deductible Health Plan (QHDHP)
- You must not be covered by another non-QHDHP, such as a spouse’s PPO plan.
- You are not enrolled in Medicare.
- You are not in the TRICARE or TRICARE for Life military benefits program.
- You have not received Veterans Administration (VA) benefits within the past three months.
- You are not claimed as a dependent on another person’s tax return.
- You are not covered by a traditional health care flexible spending account (FSA). This includes your spouse’s FSA. (Enrollment in a limited purpose health care FSA is allowed).
2026 HSA Contributions
You can contribute to your Health Savings Account on a pre-tax basis through payroll deductions up to the IRS statutory maximums. The IRS has established the following maximum HSA contributions: FOR THE 2026 TAX YEAR:
- Individual: $4,400
- Family: $8,750
- If you are age 55 and over, you may contribute an extra $1,000 catch up contribution.
How do I get reimbursed for my eligible expenses?
The easiest way to use your HSA dollars is by using your HSA Debit Card at the time you incur an eligible expense. Or you can withdraw money from an ATM. But keep your receipts! You must be able to prove that you were reimbursing yourself for an eligible expense if you are audited. If you use your HSA funds for non-eligible expenses, you will be charged a 20% penalty tax (if under age 65) as well as federal income taxes. You can manage your HSA through Health Equity 24 hours a day, seven days a week. Health Equity provides helpful information about your HSA, including online calculators to help you add up your tax savings and see your HSA's possible future growth.
Four reasons to love an HSA
Flexible Spending Account (FSA)
You don’t have to enroll in one of our medical plans to participate in the healthcare FSA. However, if you or your spouse are enrolled in our high deductible health plan , you can only participate in the “limited purpose” FSA for dental and vision expenses.
Set aside healthcare dollars for the coming year
- A healthcare FSA allows you to set aside tax-free money to pay for healthcare expenses you expect to have over the coming year
How health care FSA works
- You estimate what you and your family’s out-of-pocket costs will be for the coming year. Eligible expenses include office visits, surgery, dental and vision expenses, prescriptions, even eligible drugstore items.
- You can contribute up to $3,200, the annual limit set by the IRS. Contributions are deducted from your pay pretax, meaning no federal or state tax on that amount.
- During the year, you can use your FSA debit card to pay for services and products. Withdrawals are tax-free as long as they’re for eligible healthcare expenses.
Dependent Care FSA
Dependent Care FSA—up to $5,000 per year tax-free
A dependent care Flexible Spending Account (FSA) can help families save potentially hundreds of dollars per year on day care. This program is administered by [NAME HERE].
Here's how the Dependent FSA works
You set aside money from your paycheck, before taxes, to pay for work-related day care expenses. Eligible expenses include not only child care, but also before and after school care programs, preschool, and summer day camp for children under age 13. The account can also be used for day care for a spouse or other adult dependent who lives with you and is physically or mentally incapable of self-care.
You can set aside up to $5,000 per household per year. You can pay your dependent care provider directly from your FSA account, or you can submit claims to get reimbursed for eligible dependent care expenses you pay out of pocket.
Estimate carefully! You can’t change your FSA election amount mid-year unless you experience a qualifying event. Money contributed to an FSA must be used for expenses incurred during the same plan year. Unspent funds will be forfeited.
If you want to participate in the FSA for 2024, you must ACTIVELY enroll!