The US has two accounts that let you pay for healthcare with tax breaks — the HSA and the FSA. The names look alike, but the rules are very different. Above all on one point: what happens to money you do not spend.
1. What you can put in. For 2026: HSA $4,400 self-only, $8,750 family; Health FSA $3,400 — the HSA family limit is two and a half times the FSA's. At 55 or over you add $1,000 to an HSA.
2. Where the risk is. The FSA is use-or-lose — spend it within the plan year or forfeit what is left. Two relief options exist but your employer has to adopt them, and the carryover cap is only $680. An HSA simply rolls on.
3. What to do. Not everyone may fund an HSA — you must be enrolled in a high deductible health plan, meaning a 2026 annual deductible of at least $1,700 self-only or $3,400 family. Check whether your plan qualifies before anything else.
The 2026 amounts come straight from IRS revenue procedures — HSAs and HDHPs from Rev. Proc. 2025-19, FSA limits from Rev. Proc. 2025-32 §4.15.
2026 limits
| Account | 2026 annual limit | Source |
|---|---|---|
| HSA — self-only | $4,400 | Rev. Proc. 2025-19 |
| HSA — family | $8,750 | Rev. Proc. 2025-19 |
| Health FSA | $3,400 | Rev. Proc. 2025-32 §4.15 |
| FSA carryover maximum | $680 | Rev. Proc. 2025-32 §4.15 |
The procedures read: “For calendar year 2026, the annual limitation on deductions…for an individual with self-only coverage under a high-deductible health plan is $4,400”, with $8,750 for family coverage. For the FSA: “For taxable years beginning in 2026, the dollar limitation under §125(i)…is $3,400” and “the maximum carryover amount is $680”.
An HSA needs an HDHP
You cannot contribute to an HSA unless you are enrolled in a high deductible health plan. The 2026 definition is in the same procedure:
“a ‘high deductible health plan’ is defined…as a health plan with an annual deductible that is not less than $1,700 for self-only coverage or $3,400 for family coverage, and for which the annual out-of-pocket expenses…do not exceed $8,500 for self-only coverage or $17,000 for family coverage.”
| 2026 HDHP test | Self-only | Family |
|---|---|---|
| Minimum annual deductible | at least $1,700 | at least $3,400 |
| Maximum out-of-pocket | no more than $8,500 | no more than $17,000 |
So a low-deductible plan disqualifies you from an HSA entirely. When comparing employer plans, a high deductible is not simply a negative — it is also the gateway to the HSA. See the US health insurance guide for plan selection more broadly.
The big difference: what happens to what you do not spend
This is where the two accounts part ways. An FSA carries a use-or-lose rule. In the IRS’s own words:
“Under the FSA use-or-lose provision, participating employees normally must incur eligible expenses by the end of the plan year or forfeit any unspent amounts.”
“Under the grace period option, an employee has until two and a half months after the end of the plan year to incur eligible expenses.”
There are two softeners, and a plan may offer only one of them — either the 2½-month grace period or the carryover. And the carryover is capped at $680 for 2026.
That IRS page dates from 2019 and still prints $500 as the carryover. We quote it only for the structure (use-or-lose, grace period, choose one) and take the amount from the 2026 procedure.
An HSA behaves differently. IRS Publication 969: “An HSA is ‘portable.’ It stays with you if you change employers or leave the work force.” It follows you, and it does not expire at year end.
| Item | HSA | Health FSA |
|---|---|---|
| Eligibility | HDHP enrolment required | Available if your employer offers it |
| 2026 limit | $4,400 / $8,750 | $3,400 |
| Unspent at year end | Rolls over in full | Forfeited in principle (up to $680 carryover, or a grace period) |
| If you change jobs | “Portable” — it follows you | Not verified |
| Age 55 and over | +$1,000 | Not applicable |
Why the FSA cell is left unverified: the common claim that “an FSA belongs to the employer and disappears when you leave” is widely repeated, but we could not find an IRS sentence saying so. Only the HSA’s “portable” is sourced, so we do not state the mirror image.
The $1,000 catch-up at 55
IRS Publication 969: “If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000.”
Note that the edition carrying this sentence is “For use in preparing 2025 Returns”. The $1,000 is a fixed statutory amount rather than an indexed one, so it should be unchanged — but we did not verify it against a 2026 edition.
For anyone near retirement an HSA is more than a medical account. See 401(k) and IRA for the rest of the picture.
Where this goes wrong in practice
- Not checking the FSA balance in December — anything above $680 simply disappears.
- Choosing a plan on deductible alone — a low deductible removes HSA eligibility.
- Assuming you get both carryover and a grace period — the IRS guidance presents them as alternatives. Check your plan document.
- Rushing to spend an HSA — you do not have to. It keeps.
To see how these come out of your pay, run the numbers through the US paycheck calculator.
Questions people ask
Can I have both an HSA and an FSA?
Restrictions are understood to apply depending on the combination, but we could not verify them against an IRS source. Check with HR or your plan document.
What if I take HSA money out for something other than medical costs?
Income tax applies, plus a separate 20% additional tax, and the additional tax goes away after disability, death or age 65 — the income tax does not. Confirmed against Publication 969 and set out in spending an HSA on something other than medical care.
From when do the 2026 limits apply?
The HSA procedure says “effective for HSAs for calendar year 2026” — a calendar-year basis. The FSA limit is scoped to “taxable years beginning in 2026”.
Does the Dependent Care FSA share this limit?
No. The $3,400 here is the health FSA limit. The Dependent Care FSA limit rose to $7,500 for 2026 and carries an earnings condition of its own — see the Dependent Care FSA.
My deductible is $1,700 — is that an HDHP?
It meets the deductible test. But the out-of-pocket maximum must also qualify — no more than $8,500 for self-only coverage. Both conditions apply.
Sources and where to check
- Internal Revenue Service — Rev. Proc. 2025-19 (2026 HSA inflation adjustments). Primary source for the $4,400 / $8,750 limits and the 2026 HDHP tests ($1,700 / $3,400 deductible, $8,500 / $17,000 out-of-pocket), scoped “effective for HSAs for calendar year 2026”.
- Internal Revenue Service — Rev. Proc. 2025-32 §4.15. Primary source for the $3,400 health FSA limit and the $680 carryover maximum.
- Internal Revenue Service — IRS releases tax inflation adjustments for tax year 2026 (IR-2025-103). The $3,400 and $680 figures match the procedure.
- Internal Revenue Service — Publication 969. Source of the +$1,000 at 55 and “An HSA is ‘portable’”. Note this is the 2025 returns edition.
- Internal Revenue Service — Eligible employees can use tax-free dollars for medical expenses (IR-2019-184). Source of the use-or-lose rule and the 2½-month grace period. Dated 2019, so no amounts were taken from it.
Written as of July 2026. The HSA and FSA limits, the HDHP tests, the carryover cap, the use-or-lose rule and grace period, and the HSA’s portability all come from the sources above, and each figure was read twice and matched. Five things could not be verified: (1) whether the $1,000 catch-up appears in a 2026 edition (we checked the 2025-returns Publication 969); (2) an IRS sentence stating that an FSA is forfeited on leaving a job; (3) restrictions on holding an HSA and FSA together; (4) what happens to an FSA when you leave a job. The rate and age conditions for a non-medical HSA withdrawal, and Dependent Care FSAs, now have pieces of their own (linked above). Employer plans differ in the details — check with HR and your plan document. This is not tax advice.
