With the cost of health insurance going up and up, saving money on medical expenses is one of the hottest topics in the US. With Obama’s health care plan passed a few years or so ago, chances are you’re missing out on some opportunities to save money on medical bills. Perhaps you have a Health Savings Account (HSA) or Flexible Spending Account (FSA).

But which should you use? Both HSAs and FSAs save money, but which one saves more? Which one fits your needs the best?

First, let’s examine the health savings account (HSA). Basically, a health savings account is a kind of savings account that allows you to store funds for later use on qualifying expenses. One big advantage in using a health savings account is that deposits are made with pre-tax dollars, effectively making HSAs tax-exempt. Another huge benefit that the FSA lacks is that funds carry over to the next year if they are unused. It is possible to use the funds in your HSA to invest; HSAs are actually quite similar to IRAs. However, it is important to note that you must have a high deductible health plan to use an HSA, and it may be somewhat difficult to find an HSA plan that does not have high annual fees.

On the other hand, flexible spending accounts (FSAs) are set up by your employer rather than yourself. Funds can be used on medical and dental bills as well as medical care. Similar to an HSA, money is deposited before taxes are deducted, though this money comes out of your paycheck. One advantage to using an FSA is that you have complete control over how you spend the funds, as long as it is used on healthcare or dependent care related. (HSA funds can only be used on a smaller list of expenses.) However, a huge downfall to the FSA is that money must be used by the end of the “plan year” or you will lose all funds.

Both the HSA and FSA have their advantages, but which is better? Due to the “use it or lose it” policy, if you do not plan on spending all the funds in your FSA each year, a health savings account would be the better choice. However, you may not qualify for a health savings account if you do not have a high deductible health plan. Also, make sure the account you choose covers your most common expenses.

If you still can’t decide which is better for you, it’s always possible to have both accounts if you meet the qualifications, though sometimes FSAs might make you ineligible for a health savings account.