During enrollment season, a question people commonly ask is, “Can I have an FSA and HSA at the same time?” Both benefit accounts are popular because 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 and HSA: A Quick Comparison
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) have some similarities. They also have some significant differences.
First, let’s look at the similarities. Each pay period, the employee makes a contribution to their FSA or HSA out of their paycheck. You can use each account for most of the same eligible expenses (with a few differences).
Now to cover how they differ. Each account has its own eligibility requirements. With an FSA, there is no health plan requirement to sign up. You can enroll whether or not 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 an 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 ($3,050 for 2023). LPFSAs may also have the 2023 $610 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 a full list of 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 from your HSA (and vice versa).
One spending tip is to exhaust your LPFSA funds first before using your HSA. You can carryover all unused HSA funds, whereas the LPFSA only allows a carryover of up to $610 (for 2023). Any remaining LPFSA balance would be lost if you don’t spend it.
Dependent Care FSA
The other type of FSA that you can have with an HSA is 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. You can also pay for care for dependents who cannot look after themselves while you’re at work or 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. Download the form here.
DataPath Administrative Services is a third party benefits administrator headquartered in Little Rock, Arkansas.