Definition: An FSA is an employer-sponsored account that lets you set aside pre-tax money for qualified medical expenses. Unlike an HSA, FSA funds typically expire at year end and are not tied to a specific plan type.
A Flexible Spending Account (FSA) is an employer-sponsored benefit that lets you contribute pre-tax dollars to pay for qualified medical expenses. The key feature: contributions reduce your taxable income.
The IRS annual FSA contribution limit for 2025 is $3,300.
| Feature | FSA | HSA |
|---|---|---|
| Requires HDHP? | No | Yes |
| Funds roll over? | Limited (up to $660 in 2025) | Yes, fully |
| Employer owned? | Yes | No โ you own it |
| 2025 Limit | $3,300 | $4,300 / $8,550 |
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