Can I Contribute to Both an HSA and an FSA?

With a limited-purpose, "HSA-compatible" flexible spending account, you aren't locked out of contributions to a health savings account.

If I contribute to a health savings account, can I also contribute to my employer’s flexible-spending account?

See Our Slide Show: 7 Smart Uses for Your Flex-Account Money

You generally can't contribute to both a health savings account and a flexible spending account in the same year, unless you have a limited-purpose FSA that only covers certain expenses, such as dental and vision costs. More employers are starting to offer such flexible spending accounts, giving employees an opportunity to set aside even more tax-free money for medical expenses.

The FSA must be specifically designated as an "HSA-compatible FSA." If it’s offered by your employer, you can set aside up to $2,550 pretax to this special kind of flexible spending account in 2015. You can use the money in the account tax-free only for dental and vision expenses until you reach your health insurance plan's deductible (with out-of-pocket medical expenses of at least $1,300 for individual coverage or $2,600 for a family plan). After that, you can transfer the money to a regular FSA, which can be used tax-free for any out-of-pocket medical expenses.

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You must provide evidence that you've satisfied the deductible, typically by sending in an explanation of benefits from your medical carrier, says Jody Dietel, chief compliance officer for WageWorks, which administers FSAs for employers.

The use-it-or-lose-it rules are the same as they are for regular FSAs. Under some plans, you must use the money by December 31 (you may get a grace period to March 15 of the following year). Or your employer may let you roll over $500 in the FSA from one year to the next. Because of those rules, it's best to use the money from the FSA before using funds in the HSA, which you can use tax-free for medical expenses in any year or leave in the HSA to accumulate for retirement.

For more information about HSAs, see FAQs About Health Savings Accounts.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.