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FSA vs. HSA: which is a better benefit?

Posted by Christine L. Tricoli

During Open Enrollment season it’s important to understand all the benefit options available to your employees. An especially hot topic is that of Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA). They both have a lot in common: they use tax-free dollars to help people manage their health care, and they’re easy to set up and don’t require employees to change anything about their medical benefits. The similarities however stop here, and the differences are key to understanding which you should go with.


FSAs are an employer specific option funded by the employee’s pre-tax payroll deductions. It has a contribution limit and any funds not used during the grace period of 2.5 months, over $500 that aren’t carried over to the next year are lost. But it’s great if an employee wants to lower their tax burden, and it will save you money in the long run if budgeted properly.

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HSAs are a high deductible health plan specific option, but they aren’t linked to a specific employer and the money can be rolled over year after year. Money in this option also grows tax-deferred, but maximum out of pocket amounts are high. You can also have a limited Flexible Spending Account under this option, whereas FSAs do not provide the option of HSAs.


So which is the better benefit for your employees? Both. It’s important to provide options for diverse workforces, so providing FSAs and matching HSAs is important.

Posted by Christine L. Tricoli

Christine Tricoli is manager of Business Development for Kelsey-Seybold Clinic. She joined Kelsey-Seybold in 2004. She is responsible for developing new business relationships with key business leaders, plan sponsors and the brokerage community. Prior to joining Kelsey-Seybold, Christine was a senior sales account executive for a major health insurance company in the Houston market. She brings more than 30 years of experience in managed healthcare in Houston. Christine holds a Bachelor’s in Business Administration and a Group 1 Insurance License. She is fluent in Spanish.

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Topics: Benefits, Open Enrollment

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