The Difference Between A Flexible Spending Account (FSA) And A Health Savings Account (HSA)

A Flexible Spending Account (FSA) is an employee benefit that allows you to set aside money, on a pre-tax basis, for certain health care and dependent care expenses.  There are three types of FSA accounts:  1) Health Care FSA (HCFSA); 2) Limited Expense Health Care FSA (LEX HCFSA); and 3) Dependent Care FSA (DCFSA).  If you made an FSA election for the 2021 plan year, your election amount was divided into allotments based on the number of pay dates in the plan year.  Every pay date, an allotment is deposited directly into your FSA account.

A Health Savings Account (HSA) is an investment account available only to members who are enrolled in a High Deductible Health Plan (HDHP) under the Federal Employees Health Benefits (FEHB) Program.  Your HDHP credits a portion of your premium to the HSA. The health plan will establish your HSA and will mail you your account information.  You also have the option to make pre-tax contributions to the account. To make your own contributions to your HSA, you will need the account information sent to you by your health plan.  Upon receiving your account information, you will need to use myPay to enter your HSA election.  You must enter the dollar amount you want to contribute each pay period.  The funds in your HSA can be used to pay for your plan deductible and/or qualified medical expenses that do not count towards your deductible. These accounts earn interest and roll over any remaining balance from year to year. The funds are yours to keep whether you change plans, leave Federal service, or retire. Withdrawals can also be used for non-medical expenses. However, it will be subject to income tax, and if you are under age 65, an additional 10% tax penalty.

You cannot have both a HCFSA and an HSA.  For additional information, view the comparison chart on the OPM website.