can you have an hsa and a flexible spending account

Navigating the world of healthcare benefits can feel like learning a new language. With acronyms like HSA and FSA floating around, it’s easy to get confused about what you’re eligible for. A common question that pops up is whether you can double up on these tax-advantaged accounts. So, let’s clear the air and answer the pressing question: can you have an hsa and a flexible spending account at the same time?

When You Can Have Both an HSA and FSA

The answer is a conditional yes, but there’s a crucial catch. You can only contribute to both a Health Savings Account (HSA) and a Healthcare Flexible Spending Account (FSA) simultaneously if the FSA is a specific type known as a Limited-Purpose FSA. This special FSA is designed to work in tandem with an HSA. As the name implies, its purpose is limited; it can typically only be used for qualified dental and vision expenses. This setup allows you to use your HSA for a broader range of medical costs while reserving the FSA funds for those specific needs.

The Rule That Prevents a Standard Combination

Why can’t you just have a regular healthcare FSA with an HSA? The main barrier is the IRS requirement for HSA eligibility. To contribute to an HSA, you must be enrolled in a High-Deductible Health Plan (HDHP) and cannot have any other health coverage that is not an HDHP. A standard healthcare FSA is considered “other health coverage” because it can be used for a wide array of medical expenses before you’ve met your deductible, which conflicts with the HDHP’s high-deductible structure.

Making the Most of a Limited-Purpose FSA

If your employer offers a Limited-Purpose FSA, it can be a powerful tool. Think of it as a strategic supplement to your HSA. You can use it for predictable expenses like annual eye exams, new glasses or contact lenses, and dental cleanings or fillings. This strategy allows your HSA balance to grow more freely, as you’re not dipping into it for these routine costs. Since both accounts are funded with pre-tax dollars, you’re maximizing your tax savings on healthcare spending throughout the year.

Ultimately, having both accounts is possible and can be a smart financial move, but it hinges entirely on having the right kind of health plan and the right type of FSA. Always check with your benefits administrator to confirm your specific options and ensure you’re following the IRS guidelines.