Open enrollment hands you a fork: a health FSA shelters medical dollars from income tax and the 7.65% FICA tax, but anything unspent beyond the carryover vanishes. An HSA asks you to pair a high-deductible health plan, then never forfeits a cent and invests the surplus tax-free. The per-dollar tax break is identical. The difference is entirely what happens to money you do not spend. This calculator puts both routes on one scoreboard over your chosen horizon.
Start with what is identical, because it is most of the story. Elect $1 of medical spending through payroll and it skips your marginal income tax and the 7.65% FICA tax whether it lands in an FSA or an HSA. At a 22% marginal rate that is 29.65 cents of tax avoided per dollar, identically, in both accounts. Neither account gives a federal deduction for anything else, and neither taxes qualified medical withdrawals. Anyone who tells you one account has a "bigger tax break" is selling something.
The real fork is the treatment of money you elect but never spend. FSA balances expire: 2026 rules allow a carryover of up to $680 or a grace period through mid-March, whichever your employer chose, and everything above that evaporates back into the plan. HSA balances roll over forever, stay yours through job changes, and can be invested so the surplus compounds tax-free. Over a single year the difference looks trivial. Compounded across a decade, it is the whole decision.
| 2026 feature | Health FSA | HSA |
|---|---|---|
| Employee contribution cap | $3,400 | $4,400 self / $8,750 family |
| Age 55+ catch-up | — | +$1,000 |
| Fate of unused money | Carryover up to $680, or 2.5-month grace | Rolls over forever, investable |
| Plan required | Any employer medical plan | Qualifying HDHP only |
| HDHP minimum deductible | n/a | $1,700 self / $3,400 family |
| Account ownership | Employer plan, ends at job change | Yours permanently |
| After 65, non-medical use | — | Income tax only, no penalty |
Source: IRS Rev. Proc. 2025-19 and IRS Publication 969 for the limits and HDHP floors; the carryover and grace-period options come from IRS guidance under Notice 2013-29, and an employer may offer one or the other, never both. Note the asymmetry in the ownership row: an FSA is a reimbursement arrangement attached to your employer, while an HSA is a bank account in your name. That single line explains most of what the calculator finds.
Variables in plain terms. The election is what you route into the FSA, capped this year at $3,400. Expenses are the eligible medical costs you realistically expect to incur during the plan year. The carryover cap is $680 for 2026 when your employer offers that option. c combines your marginal income tax rate with the 7.65% FICA both accounts dodge through payroll. r is the expected annual return on invested HSA surplus, and N is the years you want the comparison to run. The HSA's second term is an ordinary annuity: whatever contribution exceeds annual spending compounds tax-free, which is exactly the money that would have been forfeited on the FSA side.
The default profile: $2,600 of expected medical spending, a $3,400 FSA election (the 2026 cap), an employer with the $680 carryover option, an equal $3,400 HSA contribution, a 22% marginal rate, a 6% return, ten years. Both routes avoid $1,008.10 of tax in year one: $748.00 of income tax plus $260.10 of FICA, on an identical $3,400 of payroll election. On the FSA side, $3,400 of election against $2,600 of spending leaves $800 unspent, of which the $680 carryover rescues $680, so $120 is at risk every year. Netted out, the FSA is worth $888.10 per year, $8,881.00 over the decade.
The HSA side banks the same $1,008.10 of annual tax savings and never forfeits anything. Its $800 of annual surplus invests at 6% and compounds to $10,544.64 over ten years, so the HSA's total value is $20,625.64 against the FSA's $8,881.00. The HSA's advantage is $11,744.64, built from two pieces: $1,200 of avoided forfeitures and $10,544.64 of tax-free growth the FSA could never offer. Drop the employer's carryover option and the at-risk amount jumps to $800 a year, pushing the HSA's advantage to $18,544.64. At a more conservative 4% return the advantage is still $10,804.89.
Two boundary cases sharpen the intuition. Stretch expected spending to exactly $3,400 and every FSA dollar gets spent: forfeiture falls to zero, and with equal elections the two routes tie at $10,081.00 apiece. The FSA's only real loss is its inability to hold money. Push the HSA toward its $4,400 self-only limit instead: annual tax savings rise to $1,304.60, the $1,800 of surplus compounds to $23,725.43, and the HSA's ten-year advantage over the default FSA reaches $27,890.43. The bigger the gap between what you can shelter and what you will spend, the more the HSA's rollover matters.
This comparison deliberately holds the tax mechanics constant, because they are constant. What varies in real life is the insurance wrapper: an HDHP trades lower premiums for a $1,700-or-higher deductible, and that trade belongs to a different spreadsheet. If the HSA route wins here, the HSA calculator takes the next step and prices the account's long-term growth against a taxable brokerage, including the triple-tax effect and the age-55 catch-up. The payroll plumbing behind the 29.65% combined rate is the same machinery the take-home pay calculator walks through, line by line. And if the HSA wins and you start banking the surplus, the Roth vs Traditional IRA calculator is the natural companion for deciding where your next retirement dollar goes.
Only in limited cases. A general-purpose medical FSA disqualifies you from contributing to an HSA, even if the FSA comes from your spouse's employer. What does coexist with an HSA is a limited-purpose FSA restricted to dental and vision expenses, a post-deductible FSA that only pays claims after the HDHP deductible is met, or a dependent care FSA, which covers child and elder care rather than medical costs. If open enrollment offers both a general FSA and an HDHP with an HSA, you generally have to choose one.
Health FSA balances are use-it-or-lose-it, but IRS guidance lets your employer soften the cliff in one of two ways, never both: a grace period of up to 2.5 months into the next plan year, or a carryover of up to $680 for 2026. Any balance left beyond the option your employer chose is forfeited back to the plan. The practical fix is under-election: budget conservatively, since unspent FSA dollars buy nothing while unspent HSA dollars stay invested and stay yours.
Both accounts reach their tax break through an employer's Section 125 cafeteria plan. Money you elect never appears in W-2 wages, so it avoids income tax withholding and the 7.65 percent FICA tax at the same time. One subtlety: skipping FICA slightly lowers the Social Security wages your future benefit is computed from, a trivial cost for most earners but worth knowing. Contributions you make to an HSA outside of payroll, by contrast, recover income tax only, which is why payroll routing matters for both accounts.
The HSA is yours permanently: the balance follows you, keeps growing tax-free, and can be reimbursed for qualified expenses whenever they occur. An FSA is an employer-owned arrangement. Reimbursements are limited to expenses incurred before your termination date, COBRA continuation for FSAs is rare and rarely worthwhile, and any remaining balance is forfeited. If a job change is anywhere on your horizon, that asymmetry alone tilts the comparison toward the HSA.
For 2026, per IRS Rev. Proc. 2025-19, the health FSA employee election cap is $3,400 with a maximum carryover of $680. HSA limits are $4,400 for self-only HDHP coverage and $8,750 for family coverage, plus a $1,000 catch-up at age 55. Qualifying HDHPs must have a deductible of at least $1,700 self-only or $3,400 family, with out-of-pocket maximums of $8,500 and $17,000. FSA amounts are set per employer plan, and unused HSA room does not roll over between years, it simply accrues to your balance.
Start with eligibility: no HDHP means the HSA is off the table and an FSA is still a solid 29.65 percent pre-tax deal. If both are available, the HSA wins in most scenarios because nothing is ever forfeited, the balance invests and compounds tax-free, and unused room becomes permanent savings rather than a deadline. The FSA remains reasonable when your medical spending is large, predictable, and close to your election, and when the HDHP's higher premium or deductible outweighs the HSA's advantages. Run both plans' premiums through the comparison before deciding.