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13 qualifying life events that trigger ACA special enrollment
Outside of open enrollment, a special enrollment period allows you to enroll in an ACA-compliant plan (on or off-exchange) if you experience a qualifying life event.

Latest News & Topics

Latest News & Topics


Finalized federal rule reduces total duration of short-term health plans to 4 months
A finalized federal rule will impose new nationwide duration limits on short-term limited duration insurance (STLDI) plans. The rule – which applies to plans sold or issued on or after September 1, 2024 – will limit STLDI plans to three-month terms, and to total duration – including renewals – of no more than four months.
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What is the difference between an FSA and an HSA?

What is the difference between an FSA and an HSA?

What is the difference between a flexible spending account (FSA) and a health savings account (HSA)?

Both FSAs and HSAs are tax-advantaged accounts that allow people to save money to pay for qualified medical expenses, but they have several key differences. The ACA implemented some new restrictions on FSAs and HSAs.

Flexible spending accounts (FSAs)

  • Established by an employer.
  • Usually funded by pre-tax payroll deduction, but employers can also contribute.
  • Employees must opt-in to the FSA and set their contribution amount (up to the maximum allowed) during the employer’s annual open enrollment period. Mid-year changes can only be made if the employee has a qualifying life event.
  • Can be used in conjunction with any type of health insurance, although health insurance coverage is not required.
  • In the past, employers could set their own FSA contribution limits for their employees. But the ACA limits contributions to no more than $3,050 in 2023, and no more than $3,200 in 20241 (this is adjusted annually for inflation by the IRS; it started at $2,500 in 2013). Employers can still set FSA contribution limits that are lower than the amount allowed by the IRS, but not higher. Note that Dependent Care FSAs (DC-FSA) are not the same as medical FSAs, and have different contribution limits.
  • “Use it or lose it” — money not used by the end of the year (or by March 15th of the following year if the employer offers a grace period) is forfeited, although employers can allow enrollees to carry over some unused money into the next year instead of allowing FSA funds to be used as late as March 15 of the following year. The maximum amount that can be carried over to the coming year is set by the IRS and indexed annually. Up to $610 can be carried over from 2023 to 2024, and up to $640 can be carried over from 2024 to 2025, if the employer allows it.1 (Note that if the plan doesn’t follow the calendar year, money has to be used up by the end of the plan year; alternatively, the employer can use the same grace period or carryover allowance from one plan year to the next.)
  • Contributions are deducted from each paycheck throughout the year.  However, the full annual contribution amount is available for use immediately (or after the first contribution is made). If the employee uses the full amount and then quits or is terminated before the end of the year, FSA funds do not have to be paid back to the employer. But on the flip side of that, if an employee quits with money in their FSA, they forfeit it to the employer. This is also the case under the “use it or lose it” provision, in which leftover funds can be forfeited from one year to the next
  • FSA funds can be used to cover deductibles, copays, and coinsurance, as well as qualified medical expenses that are not covered by health insurance, such as LASIK eye surgery. The ACA implemented a rule that prohibited the use of FSA funds to purchase over-the-counter medications, unless a doctor prescribed them. But Section 4402 of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act changed that, allowing pre-tax FSA funds to be used for over-the-counter drugs without a prescription. This was retroactive to January 1, 2020, and is a permanent change. Section 4402 of the CARES Act also changed the rules to allow menstrual products to be purchased with FSA funds.

Health savings accounts (HSAs)

  • Can be established by an employer or by an individual, but only in conjunction with an HSA-qualified high deductible health plan (HDHP). You must be enrolled in an HDHP to make contributions to an HSA or receive employer contributions to your HSA. But the HSA administrator (bank, investment firm, etc.) does not have to be in any way affiliated with the insurance company that offers the HDHP. People who have an HSA through their employer are free to transfer the money to a different HSA administrator if they choose to do so (in other words, you don’t have to leave the money with the HSA administrator that your employer has selected).
  • HDHPs are defined and regulated by the IRS, with minimum deductible and maximum out-of-pocket requirements, as well as a ban on non-preventive services being paid for by the health plan before the deductible has been met (ie, that means the plan will not have copays for office visits, for example, but will instead require the patient to pay the full network-negotiated amount for the visit if they haven’t yet met their deductible). But the IRS has relaxed the rules to allow (but not require) HDHPs to include more services under the preventive care umbrella.
  • Contributions can only be made while the account holder remains covered by an HDHP.  However, the money can be used — without being taxed — for qualified medical expenses at any time in the future, even if the person is no longer covered by an HDHP.
  • Can be funded (pre-tax) by employee payroll deductions or employer contributions, or by an individual. Payroll deductions to fund HSA contributions are made before any taxes are calculated, including income tax as well as FICA (Medicare and Social Security) taxes. People who purchase their own individual/family HDHPs and fund them directly (ie, not with payroll deduction) can deduct the contributions on their tax returns. This makes them pre-tax as far as income tax is concerned, but it does not avoid Medicare and Social Security taxes.
  • In 2023, the maximum HSA contribution is $3,850 for a person with individual coverage under an HDHP, and $7,750 for those with family HDHP coverage (“family” means the HDHP covers the primary enrollee plus at least one additional family member; it does not have to cover the whole family). For 2024, the contribution limits will increase to $4,150 and $8,300, respectively.
  • If an HSA is established by an employer and the employee quits or is terminated, the HSA balance goes with the employee, regardless of whether contributions were made by the employee or the employer.
  • Money in the HSA that is not used for medical expenses remains in the account and simply rolls over from one year to the next. There is no “use it or lose it” rule for HSAs.
  • HSA funds can be used for the same qualified medical expenses as FSA funds. And just like FSAs, from 2011 through 2019, a doctor’s prescription was necessary to use pre-tax HSA funds to buy over-the-counter medications. But the CARES Act relaxed that rule, allowing over-the-counter medications (and menstrual products) to be purchased with HSA funds.
  • If money is withdrawn for qualified medical expenses, it is never taxed.
  • If money is withdrawn for other purposes before age 65, it is taxed and there is an additional 20% penalty applied. Before 2011, the penalty was 10%.
  • After age 65, money can be withdrawn without a penalty, but if it is not used for qualified medical expenses, income taxes will be owed.
  • Conservative healthcare reform proposals have generally called for an increased focus on HSAs, with higher contribution limits and greater flexibility. But as of 2023, none of those measures had been implemented. HSAs continue to have contribution limits that are indexed annually using the same formula that’s been used in prior years. And access to HSAs continues to be limited to people who have HDHPs, which must comply with IRS regulations.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for


  1. IRS: 2024 Flexible Spending Arrangement contribution limit rises by $150. Internal Revenue Service. December 2023.  

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