How is an HSA different from an FSA?

The main difference between an FSA and an HSA is that the FSA is a spending account and the HSA is a savings account. The IRS makes that distinction because the employee is expected to spend the money they have set aside in their FSA within the plan year (plus an optional two and half month grace period) or forfeit any funds not spent. This is otherwise known as the use it or lose it rule. By contrast, the HSA rules allow an individual to save their money until they need it, even if that isn't until many years later. HSA unused or saved funds do not go away at the end of the year but remain available to the accountholder year over year. There are many other similarities and differences as outlined in this comparison chart.