HSAs vs. FSAs: Can They Cover the Same Costs?

HSAs and FSAs can cover many of the same types of qualified medical expenses, as defined in IRC Section 213(d). However, HSAs can cover some additional expenses that FSAs are not permitted to cover. For example, HSAs can reimburse account owners for qualified long-term care expenses on a tax-free basis (FSAs cannot). However, HSAs can only reimburse for health expenses of the account owner's child if that child qualifies as a dependent. FSAs, on the other hand, can reimburse for those expenses if the child is under the age of 27 as of the end of the tax year (regardless of whether the child qualifies as a dependent). HSAs can also make distributions even if the account owner uses the money for non-medical expenses (although penalty taxes will apply), while FSAs are only permitted to make distributions to cover qualified expenses. For more information on the FSA rules, visit Tax Facts Online. : Q 8827. Note: Q is updated.