Advertisement
savings

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.

Advertisement - Article continues below

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.

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.

Advertisement
Advertisement

Most Popular

7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Retired? Good Luck Getting a Mortgage, Even If You’re Wealthy
mortgages

Retired? Good Luck Getting a Mortgage, Even If You’re Wealthy

One 70-year-old’s story highlights the challenges. Prepare for more paperwork and hoops to jump through than you could imagine.
August 2, 2020
Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020

Recommended

How to Navigate Emergency Funds in Urgent Times
savings

How to Navigate Emergency Funds in Urgent Times

COVID-19 has revealed cracks in many people’s financial plans, and emergency funds have never been more important.
July 12, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

A health savings account is a powerful, tax-advantaged tool to cover out-of-pocket medical expenses and a smart way to save for medical expenses in re…
July 3, 2020
Find the Best Money Market for You
money market accounts

Find the Best Money Market for You

Whether you choose a money market fund or account largely depends on the money's purpose.
June 24, 2020
Pass Along Life Lessons With an Ethical Will
retirement

Pass Along Life Lessons With an Ethical Will

Create a legacy letter to communicate values, experiences and life lessons to your family.
June 9, 2020