An FSA is an employee benefit that allows you to set aside a portion of your pre-tax income to cover qualified healthcare and dependent care expenses.

There are three types of FSA accounts: Health Care FSA (HCFSA), Limited Expense Health Care FSA (LEX HCFSA), and Dependent Care FSA (DCFSA). Each serves a specific purpose.

The amount you allocate to your FSA is divided into equal allotments, usually based on the number of pay dates in the plan year.

Contributions to an FSA are tax-free, and you can use the funds for eligible medical and dependent care expenses.

FSA funds do not earn interest or roll over from year to year. They are "use it or lose it" and typically must be spent within the plan year.

An HSA is available to individuals enrolled in a High Deductible Health Plan (HDHP). It's not tied to specific employment and is portable.

Both the individual and their employer can make contributions to an HSA. These contributions are tax-deductible and grow tax-free.

HSA funds can be used to cover qualified medical expenses, including the plan deductible, and can be invested to earn interest.

Unlike FSAs, HSA funds can roll over from year to year, and they belong to the account holder. They can be kept even if you change jobs, retire, or switch healthcare plans.

While HSA withdrawals for medical expenses are tax-free, non-medical withdrawals are subject to income tax and, if you're under 65, an additional 10% tax penalty.