| Type of Account | Employer-sponsored, pre-tax savings account for eligible medical expenses. | Individual, pre-tax savings account for qualified medical expenses. |
| Eligibility | Generally offered by employers to employees as part of their benefits package. | Available to individuals with a high-deductible health plan (HDHP). |
| Ownership | Typically owned by the employer, but the employee contributes and benefits. | Owned and controlled by the individual account holder. |
| Contribution Limits | Set by the IRS annually; in 2022, the limit is $2,750. | Set by the IRS annually; in 2022, the limit for self-only coverage is $3,650, and for family coverage, it's $7,300. |
| Rollover of Funds | Usually, up to $550 of unused funds can be rolled over to the following year (if the employer permits). | Funds can roll over year to year indefinitely; there's no "use it or lose it" rule. |
| Portability | Typically not portable; the account is tied to the employer, and the balance is lost if the employee changes jobs. | Fully portable; the account stays with the individual, even if they change jobs or retire. |
| Investment Option | Usually, limited or no investment options. | May offer investment options, allowing account holders to grow their savings over time. |
| Withdrawal for Non-Medical Expenses | Subject to income tax and a 20% penalty. | After age 65, withdrawals for non-medical expenses are subject to income tax but not to the 20% penalty. |
| Tax Benefits | Contributions are pre-tax, reducing taxable income. | Contributions are pre-tax, reducing taxable income, and withdrawals for qualified medical expenses are tax-free. |
| Eligible Expenses | Covers qualified medical expenses, including copayments, deductibles, prescriptions, and certain over-the-counter items. | Covers qualified medical expenses, including copayments, deductibles, prescriptions, and certain over-the-counter items. |
| Account Holder's Responsibility | Responsible for tracking eligible expenses and submitting reimbursement requests. | Responsible for tracking eligible expenses and maintaining records for tax purposes. |
| Account Usage During Retirement | Cannot be used for retirement expenses, as it's intended for current medical expenses. | Can be used for qualified medical expenses during retirement, including Medicare premiums. |
