Can You Get Both an HSA and FSA? Learn the Key Differences and Benefits

Many individuals are often confused about whether they can have both a Health Savings Account (HSA) and a Flexible Spending Account (FSA) at the same time. The short answer is yes, you can have both an HSA and FSA, but there are some important distinctions and limitations to consider.

Both HSA and FSA are popular options for saving money on healthcare expenses, but they have different rules and benefits. Here’s a breakdown of HSA and FSA:

Health Savings Account (HSA)

• Triple-tax advantage: Contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are tax-free.
• High deductible health plan (HDHP) required: To be eligible for an HSA, you must be enrolled in an HDHP.
• Contributions roll over: The money in your HSA rolls over from year to year, so you never lose it.

Flexible Spending Account (FSA)

• Pre-tax contributions: Contributions are made with pre-tax dollars, lowering your taxable income.
• Use-it-or-lose-it rule: Typically, you must use the funds in your FSA by the end of the plan year or lose them, although there may be a carryover option or grace period.
• No HDHP required: FSAs are not linked to any specific health insurance plan.

So, can you have both an HSA and FSA?

Yes, you can have both types of accounts, but there are some restrictions:

• Limited purpose FSA: If you have an HSA, you can still have a Limited Purpose FSA to cover vision and dental expenses.
• General Purpose FSA: You can also have a General Purpose FSA if your employer offers it, but you cannot use it for medical expenses covered by your HSA.

By understanding the differences between HSA and FSA, you can maximize the tax benefits and savings opportunities they offer while staying compliant with IRS regulations.

Understanding Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can be a game-changer for managing healthcare costs. Not only can you save money through tax advantages, but knowing how to navigate both accounts can lead to significant savings over time.