Can You Convert FSA to Limited with HSA Enrollment?

One common question that arises for individuals considering enrolling in a Health Savings Account (HSA) is whether they can convert a Flexible Spending Account (FSA) to a Limited FSA when enrolling in an HSA. The answer is both yes and no, depending on the type of FSA you have.

If you have a Healthcare FSA, you cannot convert it to a Limited FSA if you enroll in an HSA. However, you can pause contributions to your Healthcare FSA while contributing to your HSA in the same plan year to avoid any conflicts.

On the other hand, if you have a Limited-Purpose FSA, it can be converted to a post-deductible Health Reimbursement Arrangement (HRA) when you enroll in an HSA. This is because Limited-Purpose FSAs are compatible with HSAs, as they only cover certain eligible expenses like dental and vision care.

Summary:

• Healthcare FSA cannot be converted to Limited with HSA enrollment.
• Pause contributions to Healthcare FSA while contributing to HSA to avoid conflicts.
• Limited-Purpose FSA can be converted to post-deductible HRA with HSA enrollment.
• Limited-Purpose FSAs are compatible with HSAs as they cover only specific eligible expenses.

Many people are curious about the interaction between a Flexible Spending Account (FSA) and a Health Savings Account (HSA). If you have a Healthcare FSA, be aware that converting it to a Limited FSA upon enrolling in an HSA isn't possible. However, a helpful tip is to pause your Healthcare FSA contributions while actively contributing to your HSA in the same year. This way, you can enjoy the benefits of both accounts without any conflicts.