Both accounts let you pay medical bills with pre-tax money. They differ in eligibility, rollover rules, ownership, investment access, and contribution limits. For most people who can choose either, the HSA wins decisively. The exception is anyone enrolled in a non-HDHP plan, which is most PPO and HMO members.
Assumes maximum HSA contribution made via pre-tax payroll deduction. FICA savings only apply to payroll-deducted contributions; self-employed contributors avoid income tax only.
| Income | Bracket | Contribution | Annual tax saved | Breakdown |
|---|---|---|---|---|
| $50,000 | 22% | $4,400 (HSA) | $1,304 | $968 federal + $336 FICA |
| $80,000 | 22% | $4,400 (HSA) | $1,304 | Same bracket, same savings |
| $120,000 | 24% | $4,400 (HSA) | $1,392 | $1,056 federal + $336 FICA |
| $200,000 | 32% | $4,400 (HSA) | $1,744 | $1,408 federal + $336 FICA |
| $200,000 (family) | 32% | $8,750 (HSA) | $3,469 | $2,800 federal + $669 FICA |
A limited-purpose FSA (LPFSA) is the one FSA flavour that does not block HSA contributions. It can only be used for dental and vision care, plus preventive medical care before the deductible. If your employer offers an LPFSA option alongside the HDHP, you can run both in parallel.
The play: contribute the full $3,400 to the LPFSA for predictable dental work (cleanings, fillings, orthodontics) and vision (exams, glasses, contacts). Keep your full HSA contribution invested for the long term. You get pre-tax dollars covering current dental and vision spending without ever touching the HSA balance.
Catch: not every employer offers an LPFSA. If yours does not, ask HR. The administrative cost is minimal and the employee benefit is substantial.