HSA vs. FSA vs. Dependent Care FSA — the plain-English guide

A one-page reference your team can actually use during open enrollment. Contribution limits, eligibility, tax perks, and real-life examples — all in 2026 numbers.

2026 IRS limits for HSA, FSA & DCFSA
Who's eligible for each account
Eligible expenses at a glance
Real-life examples HR can share

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Side-by-side comparison

2026 IRS limits and rules.

	HSA	Health FSA	Dependent Care FSA
What is it?	A personal savings account for medical expenses. Yours forever — it grows year after year and can even be invested.	A pre-tax account for medical, dental, and vision expenses you'll have this year.	A pre-tax account for child care or elder care costs that let you (and your spouse) work.
2026 contribution limit	$4,400 individual · $8,750 family · +$1,000 if age 55+	$3,400	$7,500 single or MFJ · $3,750 MFS
Who can enroll?	Only if enrolled in an HDHP. New for 2026: Marketplace bronze and catastrophic plans also qualify.	Most employees, if the employer offers it. Not allowed alongside an HSA (unless it's a limited-purpose FSA).	Employees paying for care of a child under 13 or a dependent adult, so they can work.
Use it or lose it?	Never. Unused money rolls over every year — forever.	Mostly yes. Employer may allow a carryover up to $680 or a 2.5-month grace period.	Yes. Unused funds are forfeited (some plans offer a short grace period).
What if I change jobs?	The account goes with you — it's yours.	You generally lose access (unless you elect COBRA).	You lose access to unspent funds after expenses stop.
When is the money available?	Only as you contribute each paycheck.	Full annual election is available on day 1 of the plan year.	Only as you contribute each paycheck.
Can it grow / be invested?	Yes — many HSAs let you invest in mutual funds. Growth is tax-free.	No.	No.
Tax perks	Triple tax-free: money goes in pre-tax, grows tax-free, and comes out tax-free for eligible expenses.	Contributions are pre-tax, lowering your taxable income.	Contributions are pre-tax, lowering your taxable income.
Change my election mid-year?	Yes — you can change your HSA contribution anytime.	Only with a qualifying life event.	Only with a qualifying life event (including changes in care cost/provider).

HSA

What is it?: A personal savings account for medical expenses. Yours forever — it grows year after year and can even be invested.
2026 contribution limit: $4,400 individual · $8,750 family · +$1,000 if age 55+
Who can enroll?: Only if enrolled in an HDHP. New for 2026: Marketplace bronze and catastrophic plans also qualify.
Use it or lose it?: Never. Unused money rolls over every year — forever.
What if I change jobs?: The account goes with you — it's yours.
When is the money available?: Only as you contribute each paycheck.
Can it grow / be invested?: Yes — many HSAs let you invest in mutual funds. Growth is tax-free.
Tax perks: Triple tax-free: money goes in pre-tax, grows tax-free, and comes out tax-free for eligible expenses.
Change my election mid-year?: Yes — you can change your HSA contribution anytime.

Health FSA

What is it?: A pre-tax account for medical, dental, and vision expenses you'll have this year.
2026 contribution limit: $3,400
Who can enroll?: Most employees, if the employer offers it. Not allowed alongside an HSA (unless it's a limited-purpose FSA).
Use it or lose it?: Mostly yes. Employer may allow a carryover up to $680 or a 2.5-month grace period.
What if I change jobs?: You generally lose access (unless you elect COBRA).
When is the money available?: Full annual election is available on day 1 of the plan year.
Can it grow / be invested?: No.
Tax perks: Contributions are pre-tax, lowering your taxable income.
Change my election mid-year?: Only with a qualifying life event.

Dependent Care FSA

What is it?: A pre-tax account for child care or elder care costs that let you (and your spouse) work.
2026 contribution limit: $7,500 single or MFJ · $3,750 MFS
Who can enroll?: Employees paying for care of a child under 13 or a dependent adult, so they can work.
Use it or lose it?: Yes. Unused funds are forfeited (some plans offer a short grace period).
What if I change jobs?: You lose access to unspent funds after expenses stop.
When is the money available?: Only as you contribute each paycheck.
Can it grow / be invested?: No.
Tax perks: Contributions are pre-tax, lowering your taxable income.
Change my election mid-year?: Only with a qualifying life event (including changes in care cost/provider).

Good to know

You generally can't have an HSA and a regular Health Care FSA at the same time. Some employers offer a limited-purpose FSA (dental and vision only) that pairs with an HSA. You can have an HSA or Health FSA together with a Dependent Care FSA — they cover different things.

What can I spend the money on?

HSA & Health FSA — eligible

Doctor visits, copays, deductibles, and coinsurance
Prescription meds and many OTC items (pain, allergy, cold)
Dental — cleanings, fillings, braces, dentures
Vision — exams, glasses, contacts, LASIK
Mental health therapy and counseling
Menstrual care, SPF 15+ sunscreen, first-aid supplies
Physical therapy, chiropractic, acupuncture
HSA only, new 2026: Direct Primary Care fees ($150/mo individual, $300/mo family)

Dependent Care FSA — eligible

Daycare, preschool, nursery school (children under 13)
Before- and after-school care programs
Summer day camp (overnight camp does NOT count)
Nanny or babysitter while you work
Adult day care for a dependent adult

Overnight camp is not eligible.

Real-life examples

Maria uses her HSA

Maria, 34, has individual HDHP coverage and contributes $150/paycheck ($3,900/yr) to her HSA. She spends $600 on a dental crown and $200 on glasses — the remaining $3,100 rolls into next year and she invests part of it for tax-free growth into retirement.

James uses his Health FSA

James elects $2,000. In January his son needs braces with an $1,800 down payment. Even with only one paycheck deducted, his full $2,000 is already available — he pays with his FSA card and the rest comes out over the year. He spends the last $200 on contacts and OTC allergy meds.

Priya and Dev use a Dependent Care FSA

Both work and pay $1,400/mo for daycare. They elect the new 2026 limit of $7,500. That comes out of Priya's paychecks before taxes — saving roughly $1,800–$2,200 in taxes. They submit receipts through the benefits portal and get reimbursed.

Quick decision guide

Choose the HSA

If you're on a high-deductible plan and want savings that roll over, follow you between jobs, and can grow for the future.

Choose the Health FSA

If you're on a traditional (non-HDHP) plan and have predictable expenses this year — braces, glasses, or a planned procedure.

Add the Dependent Care FSA

If you pay for daycare, after-school care, or adult day care — it works alongside either account, and the 2026 limit jumped to $7,500.

Tip: Estimate FSA elections carefully — they're use-it-or-lose-it. HSAs have no forfeiture risk, so contribute as much as you comfortably can.

Helpful links

Shop for eligible items

FSA Store
Thousands of FSA-eligible products
HSA Store
Same idea, for HSA users
Amazon FSA/HSA-eligible
Filter for eligible items, pay with your benefits card

Rules & eligibility lookups

IRS Publication 969
Official HSA and FSA rules
IRS Publication 502
Full list of qualified medical expenses
FSA Store Eligibility List
Searchable A–Z list
HealthEquity qualified expenses
Quick eligibility lookup

Give this to your team

Download the printable PDF and share it during open enrollment — or drop it into your benefits portal.

Get the HSA vs FSA Guide (PDF)

Important disclosure

This guide is provided by Blue Ocean Benefits™ for informational purposes only and does not constitute tax, legal, or financial advice. Contribution limits and rules reflect IRS guidance for the 2026 plan year and are subject to change. Plan features such as carryover amounts, grace periods, and eligible expenses vary by employer. Please refer to your official plan documents or contact your benefits administrator for details specific to your plan, and consult a qualified tax advisor regarding your individual situation.

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