Can You Have an FSA and HSA? All You Need to Know

Many individuals find themselves in the situation of having both a Flexible Spending Account (FSA) and a Health Savings Account (HSA). It's important to understand the rules and limitations surrounding these two types of accounts to make the most of the benefits they offer.

Here is what you need to know:

• FSAs and HSAs serve different purposes. FSAs are usually offered by employers and allow you to set aside pre-tax money for eligible medical expenses, while HSAs are designed for individuals with high-deductible health plans to save for medical expenses tax-free.
• Having both an FSA and HSA is allowed, but there are restrictions. If you have a general-purpose FSA, you cannot contribute to an HSA at the same time. However, you can have a limited-purpose FSA, which only covers dental and vision expenses, along with an HSA.
• If you have both accounts, it's important to keep track of your expenses. You cannot use both accounts to pay for the same expense, and you must adhere to the rules set forth by the IRS to avoid penalties.

Ultimately, having both an FSA and HSA can provide additional flexibility in managing your medical expenses, but it's essential to understand the guidelines to maximize the benefits.

Understanding the differences between an FSA and an HSA is essential for smart financial planning. While FSAs can help you manage short-term medical expenses, HSAs are a savvy long-term savings tool for future healthcare needs.