During enrollment season, a lot of employees wonder, “Can I have an FSA and HSA at the same time?” After all, both accounts are popular and people want to maximize their tax savings and lower their healthcare costs. Let’s take a look at both accounts and see if you can have an FSA and an HSA at the same time.
FSA vs HSA: Similarities and Differences
With both accounts, you set aside money each pay period before taxes are taken out and you can pay the same types of eligible expenses (with a few differences).
There are different eligibility requirements for each account, though. With a Flexible Spending Account (FSA), there is no health plan enrollment requirement to sign up. To open a Health Savings Account (HSA), you must be enrolled in a high deductible health plan (HDHP). You can have an FSA and a HDHP, in case you’re wondering.
If you have an FSA and you leave your employer, the account stays behind. If you own an HSA, the account is yours for life.
Generally speaking, you cannot have a health FSA and HSA at the same time. However, there are a couple of exceptions: limited purpose FSAs and dependent care FSAs.
How you can have an FSA and HSA at the same time:
Limited Purpose FSA
What is a limited purpose FSA (LPFSA)?
An LPFSA is available only for people who are enrolled in an HSA and it covers “limited” eligible expenses. More specifically, you can use an LPFSA to pay for out-of-pocket dental and vision items, services, and procedures. Sometimes this type of FSA is referred to as an “HSA Compatible FSA.”
Like a health FSA, the maximum annual contribution amount is the same for an LPFSA (learn more about LPFSA contribution limits). LPFSAs may also have the $550 maximum carryover, depending on the employer’s plan.
LPFSA Eligible Expenses
What can you use your LPFSA for?
- Dental plan deductibles, co-pays, and co-insurance
- Exams and diagnostic services
- Bridges, crowns, dentures, and fillings
- Reconstructions and implants
- Root canals
- Vision plan deductibles and co-insurance
- Eye exams and diagnostic services
- Eye surgery, including LASIK and laser eye surgery
- Contact lenses and solution
- Eyeglasses (prescription and over-the-counter)
- Eyeglass repair kits
- Sunglasses (prescription only)
- Service animals (e.g., guide dogs), including purchase, training, and maintenance
Contact your benefits administrator or consult IRS publication 502 for a full list of eligible medical and dental expenses.
Can you use an HSA and LPFSA for the same expense?
No. You cannot make a claim through both accounts for the same expense (also known as double-dipping). If you receive reimbursement from your HSA, you cannot file a claim for reimbursement through your LPFSA (and vice versa).
In order to maximize your benefits, you should try to exhaust your LPFSA funds first before using your HSA. You can carryover any unused HSA balance, whereas the LPFSA only allows a carryover of up to $550; the remaining funds would be lost if not spent.
Dependent Care FSA
Another type of FSA that you can have with an HSA is not healthcare related.
A dependent care FSA, also known as a Dependent Care Assistance Plan (DCAP), can be used for pay for the cost of care for dependents under age 13 and for those who cannot care for themselves during the day while you’re working or attending school (such as an elderly parent or child with disabilities).
Any eligible employee can have a DCAP account, regardless of whether they have an HSA or healthcare FSA, as long as their employer sponsors the account. The maximum annual contribution limit for a DCAP is $5,000.
Dependent Care FSA Eligible Expenses
You can use a Dependent Care FSA for the following:
- Daycare, preschool, and pre-kindergarten (including deposits for daycare)
- Before and after school care
- Day camps (overnight camps do not qualify)
- Adult care
- Elderly care
- Sick child care
Consult with your benefits administrator for a full list of DCAP eligible expenses.
Filing a claim
Talk to your benefits administrator about claims filing and reimbursement. Some TPAs offer a recurring expense form for daycare and other recurring expenses.
Can you have an FSA and HSA at the same time? Yes, with certain exceptions.
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