HSA vs FSA for Travel Nurses: Which One Works?

Introduction

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can save travel nurses hundreds or even thousands of dollars in taxes each year. Both accounts let you set aside pre-tax money for medical expenses, but they work very differently — and the contract-based nature of travel nursing makes one far more practical than the other.

Most travel nurses have heard of these accounts but are unsure which one they qualify for, how the rules change when they switch agencies, or whether the hassle is worth the tax savings. This guide clears up the confusion, explains the eligibility requirements, and shows you how to maximize the benefits of whichever account fits your situation.

This is educational content, not insurance or financial advice. Consult a licensed insurance professional or tax advisor for guidance specific to your situation.

HSA vs. FSA: The Basics

Before diving into travel-nurse-specific considerations, here is a quick overview of how each account works.

Health Savings Account (HSA). An HSA is a personal savings account for medical expenses that you own outright. To open and contribute to an HSA, you must be enrolled in a qualifying High Deductible Health Plan (HDHP). Contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. Unused funds roll over indefinitely — there is no “use it or lose it” deadline. Your HSA stays with you no matter where you work.

Flexible Spending Account (FSA). An FSA is an employer-sponsored account that lets you set aside pre-tax dollars for medical expenses. Your employer sets up the FSA, and contributions are deducted from your paycheck before taxes. The critical difference: FSAs are tied to your employer. When you leave that employer, you generally lose access to any remaining funds. Most FSAs also have a “use it or lose it” rule, meaning unspent money at the end of the plan year is forfeited (though some plans offer a small grace period or carryover amount).

Side-by-side comparison:

Feature	HSA	FSA
Ownership	You own it	Employer owns it
Portability	Stays with you forever	Tied to employer
Rollover	Unlimited	Limited or none
Requires HDHP	Yes	No
2026 Contribution Limit (Individual)	$4,300	$3,300
2026 Contribution Limit (Family)	$8,550	$3,300
Investment Options	Yes	No
Tax Benefit	Triple tax advantage	Pre-tax contributions only

Contribution limits are estimates based on historical annual increases. Verify current limits with the IRS.

HSA Eligibility for Travel Nurses

Qualifying for an HSA comes down to one main requirement: you must be enrolled in a High Deductible Health Plan.

What counts as an HDHP. For 2026, a qualifying HDHP generally must have a minimum deductible of approximately $1,650 for individual coverage or $3,300 for family coverage, with out-of-pocket maximums not exceeding roughly $8,300 (individual) or $16,600 (family). Many ACA marketplace Bronze plans and some agency-offered plans meet HDHP requirements. Check the plan details carefully — the plan should be labeled as “HSA-eligible” or “HDHP.”

How switching plans affects eligibility. This is where it gets tricky for travel nurses. If you start the year with an HDHP and then switch to a non-HDHP plan mid-year (for example, when you join a new agency that does not offer an HDHP), your contribution limit is pro-rated. You can only contribute for the months you were covered by an HDHP. Conversely, if you are on a non-HDHP plan for part of the year and switch to an HDHP, you can use the “last-month rule” to contribute the full annual amount if you are HDHP-covered on December 1 and maintain coverage through the following year.

W-2 and self-sourced plan considerations. As a W-2 employee of a staffing agency, contributions made through payroll deductions avoid both income tax and FICA taxes. If you buy your own HDHP on the ACA marketplace, you can still contribute to an HSA, but you will make contributions with after-tax dollars and then deduct them on your tax return. You save on income tax but not on FICA taxes. Either way, the savings are substantial.

What disqualifies you. You cannot contribute to an HSA if you are enrolled in Medicare, claimed as a dependent on someone else’s tax return, or have non-HDHP health coverage (including a spouse’s general-purpose FSA in some cases). You also cannot contribute if you have a general-purpose FSA, but a limited-purpose FSA (dental and vision only) is permitted alongside an HSA.

FSA Eligibility for Travel Nurses

FSAs come with a fundamental limitation that makes them less practical for most travel nurses.

Employer-sponsored requirement. You can only have a healthcare FSA if your employer offers one. Not all travel nurse agencies offer FSAs, and even those that do may have eligibility waiting periods. When your contract ends and you leave the agency, your FSA access typically ends too.

Dependent care FSA vs. healthcare FSA. A dependent care FSA is a separate account that covers childcare expenses for children under 13 (or dependent adults). The 2026 limit is $5,000 per household. For travel nurses with children who use daycare, this can be a valuable tax-saving tool — but it is still tied to your employer and subject to the same portability problems.

Limited-purpose FSA. If you have an HSA, you can also have a limited-purpose FSA that covers only dental and vision expenses. This lets you preserve your HSA funds for larger medical expenses while using the FSA for routine dental and vision costs.

What happens when your contract ends. This is the biggest problem with FSAs for travel nurses. When your contract ends and you leave the agency, you typically lose access to any unspent FSA funds. Some agencies offer a short grace period (usually 2.5 months) or allow a small carryover (up to $640 in some plans), but most of the time, unspent money is gone. If you contributed $2,000 to an FSA and only used $500 before your contract ended, you just lost $1,500.

Use-it-or-lose-it planning. If you do use an FSA, contribute conservatively. Only put in what you are confident you will spend during your contract period. Front-load your spending: schedule dental cleanings, eye exams, and any planned medical visits early in your contract to use FSA funds before they are at risk.

Tax Benefits Breakdown

The tax advantages of these accounts are the whole reason they exist. Here is exactly how much they can save you.

The HSA triple tax advantage. HSAs are one of the most powerful tax tools available to any American worker, and travel nurses can benefit enormously:

1. Tax-deductible contributions. Every dollar you contribute reduces your taxable income. If you are in the 22 percent federal tax bracket and contribute $4,300, you save $946 in federal income tax alone.
2. Tax-free growth. Money in your HSA can be invested in mutual funds, index funds, or other investments. All gains — dividends, interest, capital gains — are tax-free.
3. Tax-free withdrawals. When you use HSA funds for qualified medical expenses, the withdrawal is tax-free. No other account offers all three tax benefits.

FSA tax benefit. FSAs offer pre-tax contributions, which reduce your taxable income and your FICA taxes. But there is no investment growth component and no long-term accumulation. The tax benefit is real but limited compared to an HSA.

State-specific considerations. California and New Jersey do not recognize HSA contributions as tax-deductible at the state level. If your tax home is in one of these states, you still get the federal tax benefits, but you will owe state income tax on your HSA contributions and earnings. This does not eliminate the value of an HSA, but it does reduce the total tax benefit slightly.

For more on how these accounts fit into your overall tax strategy, see our travel nurse tax deductions guide.

Why HSAs Are Usually Better for Travel Nurses

For most travel nurses, the HSA is the superior choice. Here is why.

Portability. Your HSA belongs to you. When you switch agencies, end a contract, take a break, or retire, the account and all its funds stay with you. An FSA is left behind when you leave an employer.

No use-it-or-lose-it pressure. HSA funds roll over year after year with no expiration. You can contribute during high-earning contract years and spend during gaps or in retirement. There is no pressure to spend down the balance by an arbitrary deadline.

Investment growth potential. Once your HSA balance exceeds a threshold (typically $1,000 to $2,000 depending on the provider), you can invest the excess in mutual funds and index funds. Over a 20- to 30-year career, an HSA can grow into a substantial nest egg. A nurse contributing $4,300 per year with an average 7 percent return would accumulate over $200,000 in 20 years.

Retirement account benefits. After age 65, you can withdraw HSA funds for any purpose (not just medical expenses) without penalty. You will pay income tax on non-medical withdrawals, but that makes the HSA function like a traditional IRA at that point. For medical expenses, withdrawals remain tax-free at any age.

Pairing an ACA HDHP with an HSA. Many travel nurses buy their own HDHP on the ACA marketplace, decline agency insurance for higher pay, and contribute the savings to an HSA. This strategy gives you year-round coverage, a higher hourly rate, and a growing tax-advantaged account. See our ACA marketplace guide for help choosing an HSA-eligible plan, and our health insurance guide for the full picture.

When an FSA Might Make Sense

Despite the HSA’s advantages, there are situations where an FSA is the better or only option.

You prefer a lower deductible plan. If you want a Gold or Silver health plan with a low deductible, you will not qualify for an HSA. An FSA lets you still get some tax savings on medical expenses.

Predictable expenses in a stable contract. If you are on a long-term contract (26 or 52 weeks) and know you will incur specific medical expenses — braces, a planned procedure, regular prescriptions — an FSA lets you pre-pay those expenses with tax-free dollars.

Your agency offers generous FSA terms. Some agencies contribute employer funds to your FSA or offer favorable carryover provisions. If the agency is putting free money into your FSA, that changes the math significantly.

Dependent care FSA for parents. If you have children in daycare, a dependent care FSA can save you up to $1,000 or more in taxes per year on childcare expenses. This benefit is worth taking even if you skip the healthcare FSA.

Using FSA for dental, vision, and prescriptions. If you have an HSA but want to preserve those funds for investment growth, a limited-purpose FSA can cover your dental and vision expenses. For more on dental and vision options, see our dental and vision insurance guide.

Practical Tips for Managing These Accounts

Getting the account open is just the beginning. Here is how to manage it effectively.

Keep every receipt. The IRS can audit HSA and FSA withdrawals. Save receipts for every medical expense you pay with these accounts. A simple folder in your email or a receipt-tracking app makes this painless.

Best HSA providers for travel nurses. Look for providers with low fees, good investment options, and no minimum balance requirements. Fidelity, Lively, and HSA Bank are popular choices among travel nurses. Fidelity stands out for having no fees and a wide range of investment options.

Invest beyond the cash balance. Once you have built a cash cushion in your HSA (enough to cover your annual deductible), invest the rest. An HSA sitting in cash is losing value to inflation. Index funds with low expense ratios are a solid default choice.

The pay-out-of-pocket-now, reimburse-later strategy. There is no time limit on HSA reimbursements. You can pay medical expenses out of pocket today, save the receipts, and reimburse yourself from your HSA years or even decades later — letting the invested funds grow tax-free in the meantime. This is one of the most powerful wealth-building strategies available to HSA holders.

Avoiding common mistakes. Do not use HSA funds for non-qualified expenses before age 65 (you will pay income tax plus a 20 percent penalty). Do not over-contribute — excess contributions incur a 6 percent excise tax. And if you switch from an HDHP to a non-HDHP mid-year, stop contributing immediately and check your pro-rated limit.

Frequently Asked Questions

Can travel nurses open an HSA?

Yes, as long as you are enrolled in a qualifying High Deductible Health Plan. Many ACA marketplace Bronze plans and some agency-offered plans meet HDHP requirements. You can open an HSA through providers like Fidelity, Lively, or HSA Bank regardless of your employer. If you buy your own HDHP on the marketplace, you make contributions with after-tax dollars and deduct them on your tax return. If your agency offers an HDHP with payroll deduction, contributions avoid both income tax and FICA taxes for maximum savings.

What happens to my FSA when my travel nurse contract ends?

When your contract ends and you leave the agency, you typically lose access to any unspent FSA funds. Some agencies offer a short grace period of about 2.5 months or allow a small carryover of up to $640, but in most cases unspent money is forfeited. This use-it-or-lose-it feature is the biggest drawback of FSAs for travel nurses who change employers every 13 weeks. If you use an FSA, contribute conservatively and front-load your spending by scheduling dental cleanings, eye exams, and planned medical visits early in your contract.

Is an HSA or FSA better for travel nurses?

For most travel nurses, an HSA is the clearly superior choice. The HSA belongs to you, stays with you when you switch agencies or take breaks between contracts, and rolls over indefinitely with no use-it-or-lose-it deadline. HSAs also offer a triple tax advantage with tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses, plus the ability to invest for long-term growth. FSAs are tied to your employer, forfeit unused funds when you leave, and offer no investment options. The only reason to choose an FSA is if you prefer a lower-deductible health plan that does not qualify as an HDHP.

How much can I contribute to an HSA in 2026?

The estimated 2026 HSA contribution limit is approximately $4,300 for individual coverage and $8,550 for family coverage. If you are 55 or older, you can make an additional catch-up contribution of $1,000. If you switch between an HDHP and a non-HDHP plan during the year, your contribution limit is pro-rated based on the months you were covered by the HDHP. Always verify the current limits with the IRS, as these amounts are adjusted annually for inflation.

Can I use HSA funds for dental and vision expenses?

Yes. Dental and vision expenses are qualified medical expenses for HSA purposes. This includes eye exams, glasses, contact lenses, dental cleanings, fillings, crowns, orthodontia, and many other dental and vision procedures. If you want to preserve your HSA balance for investment growth, you can pair your HSA with a limited-purpose FSA that covers only dental and vision expenses. Another strategy is to pay dental and vision costs out of pocket now, save the receipts, and reimburse yourself from your HSA years later after the invested funds have grown.

Frequently Asked Questions

Is an HSA or FSA better for travel nurses?

For most travel nurses, an HSA is the significantly better choice. HSAs are portable, meaning the account stays with you regardless of which agency you work for or whether you are between assignments. FSAs are tied to your employer, and when your contract ends, you typically lose access to any unspent funds. HSAs also offer unlimited rollover, investment growth potential, and a triple tax advantage that FSAs cannot match. The only scenario where an FSA might be preferable is if you cannot qualify for an HSA because your health plan is not a High Deductible Health Plan.

What kind of health plan do I need to qualify for an HSA?

You must be enrolled in a qualifying High Deductible Health Plan to open and contribute to an HSA. For 2026, an HDHP generally must have a minimum deductible of approximately $1,650 for individual coverage or $3,300 for family coverage, with specific out-of-pocket maximums. Many ACA marketplace Bronze plans and some agency-offered plans meet these requirements. The plan should be labeled as “HSA-eligible” or “HDHP” in its description. If you switch from an HDHP to a non-HDHP mid-year, your contribution limit is pro-rated for the months you had qualifying coverage.

What happens to my FSA money when my travel nurse contract ends?

When your contract ends and you leave the agency, you typically lose access to any unspent FSA funds. Some agencies offer a short grace period of about two and a half months or allow a small carryover of up to $640, but most of the time, unspent money is forfeited. This is the biggest practical problem with FSAs for travel nurses. If you do use an FSA, contribute conservatively and front-load your spending by scheduling dental cleanings, eye exams, and other planned visits early in your contract to use the funds before they are at risk.

Can I use HSA funds for dental and vision expenses?

Yes. Dental and vision expenses are qualified medical expenses for HSA withdrawals. Eligible expenses include dental cleanings, fillings, crowns, root canals, orthodontia, eye exams, prescription glasses, contact lenses, and even LASIK surgery. Using HSA funds for these expenses means you are paying with tax-free dollars, effectively saving 22 to 35 percent depending on your tax bracket. Some travel nurses pair an HSA with a limited-purpose FSA that covers only dental and vision costs, preserving the HSA balance for investment growth while still getting tax-free coverage for routine care.

How much can I contribute to an HSA in 2026?

The estimated 2026 HSA contribution limits are approximately $4,300 for individual coverage and $8,550 for family coverage. If you are 55 or older, you can make an additional catch-up contribution of $1,000. If you switch between an HDHP and a non-HDHP during the year, your contribution limit is pro-rated based on the number of months you had qualifying coverage. However, the last-month rule allows you to contribute the full annual amount if you are HDHP-covered on December 1 and maintain coverage through the entire following year. Verify exact limits with the IRS, as they are adjusted annually for inflation.

Key Takeaways

• HSAs are generally the better choice for travel nurses due to portability, rollover, and investment growth potential.
• You must have a qualifying HDHP to contribute to an HSA. Many ACA marketplace Bronze plans qualify.
• FSAs are employer-tied and do not follow you between contracts. Contribute conservatively if you use one.
• HSAs offer a triple tax advantage and can grow into a significant retirement asset over time.
• Contribute the maximum if your budget allows. The tax savings are significant, and the long-term growth potential is substantial.
• Track every qualifying expense to maximize your reimbursement options now and in the future.

Related Resources

• Travel Nurse Health Insurance: Complete Guide
• ACA Marketplace Plans for Travel Nurses (2026 Guide)
• Travel Nurse Tax Deductions
• Travel Nurse Agency Benefits Comparison Guide
• How to Become a Travel Nurse

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• HSA provider comparison table with sign-up links after Practical Tips section
• HDHP plan finder tool link in the ACA HDHP pairing section
• Sidebar widget for “Open an HSA in 10 minutes” CTA
• Investment platform affiliate links in the investment growth section