Which statement differentiates a Flexible Spending Account (FSA) from an HSA?

• A. FSAs are employer-sponsored and funds can roll over year to year.
• B. FSAs are owned by the individual.
• C. FSAs are employer-sponsored and funds generally do not roll over.
• D. FSAs are funded with post-tax dollars only.

Answer: (C)

The key idea is how ownership and the way funds are treated differ between FSAs and HSAs. A Flexible Spending Account is an employer-sponsored benefit tied to a specific employer plan. The funds aren't owned by you in the same way as a personal account, and, typically, any money you don’t spend by the end of the plan year is forfeited (the use-it-or-lose-it rule). Some plans offer limited rollover or a short grace period, but the standard setup is that unused funds don’t automatically carry over.

Health Savings Accounts, on the other hand, are owned by you as an individual. They are funded with pre-tax or tax-deductible contributions, often in conjunction with a high-deductible health plan, and the money rolls over year after year without being forfeited. The account is portable—you can bring it with you if you change jobs or retire, and the funds can grow over time.

So the statement that FSAs are employer-sponsored and funds generally do not roll over best captures the difference from HSAs.