While both accounts can be used for qualified medical expenses, there are significant differences. A Flexible Spending Account (FSA) is fundamentally different from a Health Savings Account (HSA).
An FSA is a “use it or lose it” spending account, meaning you have a limited amount you can contribute each year, but if you don’t use the money in it, you will lose the ability to use it later (subject to limited rollover and a grace period). With an FSA, the account is also not yours, it is your employer’s. Additionally, you have to make an election at the beginning of each Plan Year to determine how much money you want to put away. An FSA can be used with almost any type of health insurance (low or high deductible).
An HSA on the other hand is your account and it is portable. Meaning if you decide to leave your employer, you can take all of the money in your account with you. You can also rollover your balances year-to-year, so there is no concept of “use it or lose it”. The contribution limits are also higher with an HSA versus an FSA, and you can make adjustments throughout the year. In addition to helping you save on qualified expenses, an HSA also accrues interest tax-free, and the funds can even be invested tax-free. Contributions to an HSA can only be made with an active qualifying Health Deductible Health Plan.