HSA, FSA & HDHP: Healthcare Guide for Expats (2026)

When I first moved to the US, the healthcare system hit me like a wall. Back in Singapore and Vietnam, healthcare was relatively straightforward — you go to a clinic, you pay a reasonable bill, done. In the US? I had to learn what a "deductible" was, figure out the difference between an HMO and a PPO, and understand why my employer was offering me something called an "HSA" alongside my health insurance. I remember staring at my first open enrollment form thinking: "I have a master's degree and I genuinely do not understand any of this." :P

This guide covers the three key healthcare savings tools available to expats in the US — Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), and High-Deductible Health Plans (HDHP) — with updated 2026 IRS contribution limits, tax advantages, and a practical strategy for choosing the right combination.

Four years later, I've learned a lot — sometimes the hard (and expensive) way. My first year, I didn't contribute to my HSA because I didn't understand it. That was easily a $1,000+ mistake in missed tax savings. I've written several posts about HSA, FSA, and HDHP over the years. But the figures change annually, and those posts are now outdated. So this is the consolidated, updated guide with 2026 IRS figures — everything I wish someone had handed me on day one.

Important: Healthcare rules change frequently. Always verify the latest figures with the IRS or your HR/Benefits team before making decisions. This guide reflects data as of February 2026.

Understanding US Health Insurance Basics

Before diving into HSA and FSA, you need to understand how US health insurance works. And let me tell you — even after four years here, I still find parts of this system baffling. Unlike many countries where healthcare is government-run, the US system is primarily employer-sponsored and private.

How Employer-Sponsored Insurance Works

Most expats in the US get health insurance through their employer. Your employer selects a few plan options, and you choose one during open enrollment (typically October-December each year, with coverage starting January 1). Your employer usually pays a portion of the monthly premium, and the rest is deducted from your paycheck.

Key Terms You Need to Know

If you're new to the US system, these terms will come up constantly:

• Premium: The monthly amount you pay for insurance (like a subscription fee)
• Deductible: How much you pay out-of-pocket before insurance starts covering costs
• Copay: A fixed amount you pay for a specific service (e.g., $30 for a doctor visit)
• Coinsurance: The percentage you pay after meeting your deductible (e.g., you pay 20%, insurance pays 80%)
• Out-of-pocket maximum: The most you'll pay in a year — after this, insurance covers 100%

PPO vs HMO vs EPO

Feature	PPO	HMO	EPO
Choose any doctor	Yes (higher cost out-of-network)	No (must stay in-network)	No (must stay in-network)
Need referral for specialist	No	Yes	No
Monthly premium	Higher	Lower	Medium
Out-of-pocket costs	Medium	Lower	Lower
Flexibility	Most flexible	Least flexible	Medium

My take as an expat: If you're new and unsure, a PPO gives you the most flexibility to find doctors you're comfortable with. Once you're settled and have providers you trust, an HMO can save you money.

Health Savings Account (HSA) — 2026 Guide

An HSA is, in my opinion, the single best financial tool available to expats in the US — and I don't say that lightly! It's a savings account with triple tax advantages — and your money rolls over forever. When I finally understood how it worked, I was genuinely annoyed that I'd wasted my entire first year not using it. I wrote about this back in 2022, but the limits have changed significantly since then.

What Is an HSA?

A Health Savings Account lets you set aside pre-tax money to pay for qualified medical expenses. Think of it as a special savings account that the government gives you tax breaks on because you're enrolled in a high-deductible health plan.

Who Is Eligible?

To contribute to an HSA, you must:

• Be enrolled in a High Deductible Health Plan (HDHP) — more on this below
• Not be enrolled in Medicare
• Not be claimed as a dependent on someone else's tax return
• Not have other non-HDHP health coverage

2026 HSA Contribution Limits

According to IRS Revenue Procedure 2025-19, the 2026 limits are:

	Individual	Family
Annual contribution limit	$4,400	$8,750
Catch-up contribution (age 55+)	+$1,000	+$1,000
Total if 55+	$5,400	$9,750

For comparison, in 2023 when I first wrote about HSA, the limits were $3,850/$7,750. That's a $550/$1,000 increase — which means more tax-free savings for you. I'll take any win I can get from the IRS!

The Triple Tax Advantage

This is what makes HSA special — no other account in the US offers all three:

1. Tax-deductible contributions: Your contributions reduce your taxable income. If your marginal tax rate is 25% and you contribute $4,400, that's $1,100 in tax savings right there.
2. Tax-free growth: Any interest or investment gains in your HSA grow tax-free. No capital gains tax.
3. Tax-free withdrawals: When you use the money for qualified medical expenses, you pay zero tax.

HSA as a Retirement Vehicle

Here's something many expats don't realize: you don't have to spend your HSA money right away. You can invest it (most HSA providers offer investment options like mutual funds and ETFs) and let it grow for decades. After age 65, you can withdraw HSA funds for any purpose — you'll pay income tax (like a traditional IRA) but no penalty. For medical expenses, withdrawals remain completely tax-free at any age.

Common HSA Mistakes Expats Make

• Not contributing the maximum: If you can afford it, max it out. The tax savings alone are worth hundreds of dollars.
• Not investing the balance: If you have more than a few thousand dollars in your HSA, consider investing the excess. Keeping it in cash means you're losing to inflation.
• Buying from HSA Store without comparing prices: I found that medications on HSA Store can be 50% more expensive than Amazon — and you can use your HSA debit card on Amazon too.
• Not keeping receipts: Save receipts for all medical expenses. You can reimburse yourself from your HSA years later — letting the money grow tax-free in the meantime.

Flexible Spending Account (FSA) — 2026 Guide

An FSA is similar to an HSA in that it lets you use pre-tax dollars for eligible expenses. But there are key differences — the biggest being the use-it-or-lose-it rule. I covered FSA basics in 2022 and wrote a deeper guide in 2023, but the 2026 figures are quite different.

Types of FSA

1. Healthcare FSA (HCFSA)

For out-of-pocket medical, dental, and vision expenses.

According to IRS 2026 tax inflation adjustments:

• 2026 contribution limit: $3,400 (up from $3,050 in 2023)
• 2026 carryover limit: $680 (up from $610 in 2023)

The carryover means if you don't spend everything, you can carry up to $680 into the next year. Anything above that? Gone. This is the "use it or lose it" rule.

2. Dependent Care FSA (DCFSA)

For childcare (under age 13), elder care, or care for a disabled dependent.

• 2026 contribution limit: $7,500 per household (or $3,750 if married filing separately)

This is a big change! The limit was $5,000 for years until the One, Big, Beautiful Bill increased it to $7,500. If you have kids in daycare, you know how expensive it is — so this extra $2,500 in pre-tax savings is genuinely exciting.

3. Limited-Purpose FSA (LPFSA)

Only covers dental and vision expenses. This is the FSA you can have alongside an HSA — it's the exception to the rule that you can't have both FSA and HSA simultaneously.

The Use-It-or-Lose-It Rule

This is the biggest drawback of FSA compared to HSA, and honestly, it stresses me out every year. Be conservative in your estimates — I'd rather leave a little money on the table by contributing less than forfeit hundreds by over-contributing. Some strategies to use up remaining funds before the deadline:

• Stock up on eligible items (contact lenses, prescription sunglasses, first-aid supplies) near year-end
• Schedule dental cleanings or eye exams before the deadline
• Check the FSA Store for eligible items (but compare prices elsewhere first!)

HSA vs FSA: Side-by-Side Comparison

This is the table I wish I had when I first started navigating these accounts:

Feature	HSA	Healthcare FSA	Dependent Care FSA
2026 contribution limit	$4,400 / $8,750	$3,400	$7,500
Requires HDHP enrollment	Yes	No	No
Funds roll over	Yes, fully	Up to $680	No
Portable (keep if you leave job)	Yes	No	No
Can invest the balance	Yes	No	No
Tax on contributions	Pre-tax	Pre-tax	Pre-tax
Tax on withdrawals (qualified)	Tax-free	Tax-free	Tax-free
Tax on investment growth	Tax-free	N/A	N/A
Can have both HSA + this?	—	No (except LPFSA)	Yes
Employer can contribute	Yes	Yes	Yes

Bottom line: If you're eligible for an HSA (i.e., you have an HDHP), it's almost always the better choice due to the rollover and investment advantages. But if your employer doesn't offer an HDHP, an FSA is still a great way to save on taxes.

High Deductible Health Plan (HDHP) — Should You Choose One?

To be eligible for an HSA, you need an HDHP. But should you actually choose one? I explored this in detail in my 2023 HDHP guide, but here are the updated 2026 requirements and my current thinking.

2026 HDHP Requirements (IRS)

Per IRS Revenue Procedure 2025-19:

	Individual	Family
Minimum annual deductible	$1,700	$3,400
Maximum out-of-pocket	$8,500	$17,000

When HDHP + HSA Wins

Let's do the math. Say you're choosing between:

• PPO: $200/month premium, $500 deductible
• HDHP: $100/month premium, $1,700 deductible

The HDHP saves you $1,200/year in premiums ($100 x 12 months). If you put that $1,200 into your HSA, plus the tax savings from HSA contributions, the HDHP often comes out ahead — especially if you're generally healthy and don't have frequent medical visits.

When HDHP Doesn't Make Sense

• You or your family members have chronic conditions requiring frequent doctor visits
• You're planning a major medical procedure (surgery, pregnancy)
• The premium difference between HDHP and PPO at your employer is small
• You can't afford to pay the high deductible if an unexpected medical expense hits

My personal approach: I've used an HDHP + HSA for the past three years. As a relatively healthy family, the premium savings plus HSA tax advantages have been worth it. But I'll be honest — every time one of the kids gets sick, there's a moment of "should I have gone with the PPO?" The peace of mind from a lower deductible has real value. Run the numbers with your specific employer's plan options and be honest about your risk tolerance.

Open Enrollment: What Expats Need to Know

Open enrollment catches many expats off guard. I wrote about this during open enrollment season in 2023, and the core advice still applies.

Typical Timeline

• October - December: Most employers hold open enrollment
• January 1: New coverage takes effect
• Year-round: Changes only allowed after a Qualifying Life Event (marriage, birth of child, job change, move)

Your Annual Open Enrollment Checklist

1. Review your current plan usage: Did you hit your deductible? Use all your FSA? This tells you if your current plan is right-sized.
2. Check if plan options changed: Employers often modify plan offerings, premiums, or provider networks.
3. Run the HDHP vs PPO math: Use your actual medical expenses from the past year.
4. Set HSA/FSA contributions: Max out HSA if you can. For FSA, estimate conservatively.
5. Check your beneficiaries: Make sure your HSA and life insurance beneficiaries are up to date.
6. Review dependent coverage: Did your family situation change? New baby? Child aging out?

Putting It All Together: My Recommended Approach for Expats

Here's what I'd tell a friend who just arrived in the US:

1. Year 1: Choose a PPO if available — you need flexibility while you find doctors and learn the system. If your employer offers an FSA, contribute a conservative amount ($500-$1,000) for known expenses.

2. Year 2+: Consider switching to an HDHP + HSA if you're generally healthy. Start building your HSA balance. Max it out if you can — it's the best tax-advantaged account in the US.

3. If you have kids in daycare: Always contribute to a Dependent Care FSA. At the new $7,500 limit, a family in the 24% tax bracket saves $1,800/year in taxes.

4. Every October: Re-evaluate during open enrollment. Your needs change, plans change, and limits change.

For a broader look at navigating the US healthcare system — finding doctors, managing appointments, dealing with language barriers — see my comprehensive healthcare navigation guide.

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Frequently Asked Questions

What happens to my HSA if I leave the US?

Your HSA stays with you — it's your account, not your employer's. You can continue to use the funds for qualified medical expenses even from abroad. However, you generally cannot make new contributions if you're no longer enrolled in a US HDHP. The money already in the account continues to grow tax-free. Check with a tax professional about reporting requirements in your home country.

Can I use HSA or FSA for family members abroad?

Generally, HSA and FSA funds can only be used for qualified medical expenses for you, your spouse, and your dependents as defined by the IRS. If a family member abroad qualifies as your dependent for tax purposes, some expenses may be eligible. However, this is a complex area — consult a tax professional.

What's the difference between HSA and FSA?

The biggest differences: HSA funds roll over indefinitely and the account is yours forever (portable). FSA funds mostly expire at year-end (except the $680 carryover), and you lose the account if you leave your employer. HSA requires an HDHP; FSA does not. HSA funds can be invested; FSA funds cannot. See the comparison table above for the full breakdown.

Do I lose my FSA if I change jobs?

Yes, in most cases. A Healthcare FSA is tied to your employer. When you leave, you typically have a short grace period to submit claims for expenses incurred before your departure date, but you lose access to remaining funds. This is why conservative FSA contributions are important. Some employers offer COBRA continuation for FSA, but it's rarely cost-effective.

Can I have both an HSA and an FSA?

Not a full Healthcare FSA — but you can have an HSA alongside a Limited-Purpose FSA (LPFSA), which covers only dental and vision expenses. You can also have an HSA alongside a Dependent Care FSA, since that covers childcare, not healthcare.

I know this is a lot of information. Healthcare in the US is genuinely complicated, and it took me years to feel somewhat confident navigating it. If you have questions or want to share your own experience, I'd love to hear from you — feel free to reach out!

Chandler

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Disclaimer: This content is for educational and entertainment purposes only. It does not constitute medical advice, healthcare guidance, insurance recommendations, or tax advice. Healthcare plans, tax rules, and IRS limits change frequently. Always consult with a qualified healthcare professional, licensed insurance advisor, or tax professional before making healthcare or financial decisions. Your individual circumstances may vary significantly from the examples discussed here.