Essential Information and Common Questions about Flexible Spending Accounts (FSAs) in 2024

This FSA overview has been revised with information for the 2024 tax year. While I’ve written extensively about health savings accounts (HSAs), I also want to give some consideration to their cousin, flexible spending accounts or FSAs (note that according to IRS regulations they’re called “flexible spending arrangements”, but rarely used).

Start off by reviewing what HSAs are in order to gain an understanding of the differences between an HSA and FSA. An HSA is a tax advantaged savings account used for eligible medical expenses that is combined with high deductible health plans (HDHPs). Benefits such as tax-free contributions/withdrawals for qualified expenses as well as employer contributions/growth through investments make them an outstanding option for those eligible.