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HSA or FSA: Which is Better for Married Couples?

Updated: Jan 4

Table of Contents

What is a Health Savings Account (HSA)?

A Health Savings Account allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. This top-line tax deduction is not subject to taxes, including FICA (medicare and social security) taxes.

Of note is that even contributions made to a 401k are subject to FICA taxes.

Deductibles, copayments, coinsurance, and other qualified expenses paid from money saved in an HSA account are never taxed, typically lowering out-of-pocket health care costs. HSA funds generally may not be used to pay premiums.

You determine how much to contribute within contribution limits established by the IRS. For example, the 2023 contribution limits are as follows:

  • Single plan: $3,850

  • Family plan: $7,750

At age 55, individuals can contribute an additional $1,000.

If your employer contributes to your HSA on your behalf, this may impact how much you can contribute.

What is a Flexible Spending Account (FSA)?

Flexible Spending Accounts, sometimes called Flexible Spending Arrangements, are employer-established accounts that allow employees to pay for many out-of-pocket medical expenses with tax-free dollars. Qualified expenses include insurance copayments and deductibles, qualifying medical devices, and some prescription drugs.

Employee account participants authorize their employers to withhold a specified amount from their paychecks each pay period and deposit the money in an account. Participants pay for expenses directly (out of pocket), costs that must be recuperated after applying for reimbursement.

Like an HSA, this top-line tax deduction is not subject to taxes, including FICA (medicare and social security) taxes.

FSA contributions cannot be returned in cash. You lose those contributions if you don’t use the funds within a specified time frame.

You decide how much to put in an FSA, up to a limit set by your employer within IRS contribution limits.

What is a Dependent Care FSA (DCFSA)?

A DCFSA is a pre-tax benefit account established through an FSA through your employer used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and childcare.

What are the key differences between an FSA vs HSA?

HSA or FSA: Which is Better for Married Couples?
HSA vs. FSA Which is better for married couples?


Can you have an HSA and FSA?

Sometimes, you cannot fund an HSA and FSA in the same year. You can have an HSA and an LPFSA, a limited-purpose FSA. This type of FSA covers only those expenses not covered by your health plan, such as dental and vision care.

Contact your employer for details specific to your situation for more information.

HSA vs. FSA: Which is better for married couples?

The answer: it depends.

Generally, couples who live check to check should prioritize cash flow over tax avoidance or investment opportunities within an HSA. Other couples may face ongoing expensive medical problems, making high deductible plans expensive.

On the other hand, couples with the means to manage high-deductible plans could be better off maximizing tax shelters such as HSAs.

Look at the overall cash commitment to a plan, not just the monthly premiums. Also, consider the deductible, coinsurance, copayments, and other potential costs.

Also, weigh each company’s provider network and the list of doctors the plan will cover at the lower in-network price.

The point is that the decision is based on many varying factors, which means there is no right answer for every couple. There are three common coverage combinations for spouses who both work for employers that offer health insurance to their employees.

Separate coverage

Each spouse gets insurance for only themselves and handles their coverage separately. Depending on each plan's provider network, you both may or may not be able to go to the same doctor or clinic.

Some employers will not allow you to cover your spouse on your plan if your spouse can get their own coverage from their employer. If this is the case, separate coverage for each of you would be your only option.

Other employers may charge a fee (surcharge) to cover your spouse if your spouse can get their own coverage from their employer.

Spouses with children must decide which spouse’s plan will cover the children.

Everyone on the same plan

Weigh the most prominent factors to determine if being on the same plan is best, and if so, which family plan.

Dual coverage

You each sign up for coverage from your employer and cover each other. Dual coverage is an expensive option, but it might provide more coverage.

With that being said, the task of coordinating benefits and managing dual coverage rules can be very complicated.

The U.S. Office of Personnel Management provides more unbiased details about FSAs and HSA on their FAQs for High Deductible Health Plans, HSA, and HRA page.


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