Setting money aside for healthcare costs is a smart thing to do. In the U.S. healthcare market many employers are adjusting their health benefit package in order to lower fixed costs and are giving their employees the option to choose between a health savings account (HSA) or a flexible spending account (FSA) to cover medical costs.

But which is better? I did some research to find out some information that could possible help you determine which is the best option for you.

FSAs are incredibly common. Anyone can qualify for them and they help you to save money on your taxes by taking money out of your paycheck pre-tax to spend on qualified healthcare expenditures. You have to spend 7.5% of your annual income in order to be able to deduct it from your tax bill, and that is if you are itemizing at all.

Taking the money out pre-tax to pay for these things saves you on the additional paperwork as well as hundreds of dollars on your tax bill. Unfortunately you have to be pretty certain how much you plan to spend on healthcare in a given year, and you can’t change that amount after the start of the calendar year, so if you get a cancer diagnosis in February there’s no way to go back and add more to the account.

The amount you can contribute without paying tax is only $2650 – so if you do end up spending 7.5% or more of your income on healthcare expenses and that is more than the $2650 you put in for the year you could end up paying more taxes than if you had not used an FSA at all. Your FSA covers things like medical, dental, and vision exams as well as glasses, prescriptions, many medical devices, addiction treatment, and more.

HSAs, on the other hand, allow you to deposit $3400 per person or $6750 per family per year, and if you are over the age of 55 you can add $1000 a year to that. That money rolls over in perpetuity for the rest of your life, even earning interest in certain accounts.

You can continue to accrue money to use toward your elder and end of life care, and when you die that money either rolls over to your spouse or becomes part of your estate, which is taxable at that point. Unfortunately only about 19% of Americans even qualify for this type of account – you must have a high deductible health plan in order to qualify to put money into an HSA, though you can still use the money in your HSA if you get different insurance.

An HSA covers all the same basic things that are covered by an FSA, but the advantages of being able to roll that money over in perpetuity as well as the fact that anyone can contribute to the account make this type of account very appealing to those who qualify.

With a properly managed FSA or HSA you could save hundreds of dollars on your tax bill every year. Learn more about the differences between HSAs and FSAs from this infographic.