During open enrollment, a question people commonly ask is, “Can I have an FSA and HSA at the same time?” Both accounts are popular because they help people save on healthcare expenses and increase their tax savings. Let’s take a look at both accounts and see if you can have an FSA and an HSA at the same time.
FSA and HSA: A Comparison
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) have some similarities along with some significant differences.
First, let’s look at they are the same. Each pay period, the employee makes a contribution to their FSA or HSA before taxes are taken out of their paycheck. Also, you can use each benefit account for most of the same eligible expenses (with a few differences).
Now to cover the differences. Each account has different eligibility rules. With an FSA, there is no health plan requirement to sign up; you can enroll regardless of if you have a health insurance plan. To open and contribute to an HSA, however, you must be enrolled in a high deductible health plan (HDHP).
Another notable difference is account ownership. FSAs are employer-owned, meaning that if you leave your employer, the account stays behind. With an HSA, you own the account and it is yours for life.
How you can have an FSA and HSA at the same time
Back to the original question – “can you have an FSA and HSA at the same time?” 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.
What is a limited purpose FSA (LPFSA)?
An LPFSA covers “limited” eligible expenses such as out-of-pocket dental and vision items, services, and procedures. If you’re enrolled in an HSA, you can have a LPFSA too (these are sometimes refered to as an “HSA compatible FSA”).
Like a health FSA, the maximum annual contribution amount is the same for an LPFSA (currently $2,750). 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
Refer to IRS publication 502 for more information on eligible vision and dental expenses.
Can you submit a claim through your HSA and LPFSA for the same expense?
No. You cannot make a claim through both accounts for the same expense. This is called double-dipping. If you are reimbursed from your LPFSA, you cannot file a claim through your HSA (and vice versa).
One spending tip is 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 LPFSA funds would be lost if not spent.
Dependent Care FSA
The other 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).
A dependent care FSA can be used for pay for the cost of care for dependents under age 13. It can also cover care costs for those who cannot look after 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 through their employer’s benefit plan. The maximum annual contribution limit for a DCAP is $5,000.
Dependent Care FSA Eligible Expenses
- 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
Filing a claim
If you have the same type of claim each month or week, you can submit a recurring expense form for daycare and other recurring expenses. Contact us for more information on recurring expense claims.