Here's the practical guide to choosing between a health savings account and a flexible spending account.

The fundamental difference: an HSA carries over year to year indefinitely. An FSA is typically 'use it or lose it' at year end (some plans have a $610 rollover or grace period). The HSA is attached to you, not your employer. The FSA often isn't.

The HSA requires an HDHP-eligible health plan. If you're on an HDHP (2024 minimum deductible: $1,600 individual, $3,200 family), you can contribute to an HSA. You cannot contribute to an HSA if you're on a traditional PPO.

If you have HSA access: use it, max it, invest it. Don't use an FSA for health costs if you have an HSA — the FSA use-it-or-lose-it feature is strictly inferior.

If you don't have HDHP access: a limited-purpose FSA (for dental and vision only) can coexist with some plans. A dependent care FSA for childcare expenses is a separate and valuable benefit regardless of health plan.

The FSA is valuable when you have predictable medical expenses in the current year and HSA access isn't available. The HSA is better in almost every other situation.