Frequency separation methods (FSMs) are frequently used to implement energy management of fuel cell hybrid vehicle (FCHV), due to their flexible online implementation and resilience under diverse driving environments. However, predefined static rules of FSM generally result in inefficient operation of FCHV and rapid deterioration of sources. Additionally, allocated limits of storage devices are likely to be violated in the conventional FSM. With this inspiration, the paper proposes a novel health-aware FSM (HFSM) to appropriately distribute the traction power among energy sources of FCHV with efficient urban utilization. The power separation rules of HFSM are tuned in an instantaneous manner to concurrently realize the fuel economy, lifespan extension and allocated storage limits. Within HFSM, an online optimizer is formulated, which introduces the concept of soft/hard limitations and rationalized cost structure to adequately quantify the fuel consumption and health degradation of fuel cell. An adaptive droop adjustment is then integrated with HFSM to consistently realize the storage limitations. Compared to conventional FSM, considerable improvements in the fuel economy and fuel cell service life are observed over an extended iterative loop of standard urban driving cycles.