Can I Contribute to Both FSA and HSA? Exploring the Options for Healthcare Savings

When it comes to managing your healthcare costs, having the right savings account can make a huge difference. Two popular options that individuals often consider are the Flexible Spending Account (FSA) and the Health Savings Account (HSA). But can you contribute to both FSA and HSA simultaneously?

Let's explore the options:

Flexible Spending Account (FSA)

An FSA is offered through your employer, allowing you to set aside pre-tax dollars to cover eligible medical expenses. However, there are some limitations:

• You can contribute up to $2,750 annually (2021 limit).
• Funds must be used within the plan year or grace period, or you risk forfeiting the money.

Health Savings Account (HSA)

An HSA, on the other hand, is available to individuals with high-deductible health plans. Key features include:

• You can contribute up to $3,600 for individual coverage or $7,200 for family coverage in 2021.
• Contributions roll over year after year, allowing for potential long-term savings growth.
• Contributions are tax-deductible and withdrawals for qualified medical expenses are tax-free.

Can You Contribute to Both FSA and HSA?

While you can have both accounts, there are some restrictions when contributing to both:

• If you have an HSA, you can utilize an FSA for dental and vision expenses only.
• If you have a Limited-Purpose FSA, you can use it for eligible dental and vision expenses along with your HSA for other qualified medical expenses.
• You cannot have a general-purpose FSA if you have an HSA, as they are not compatible.

Understanding the rules and limitations of each account is crucial to maximizing your healthcare savings.

When considering your options for healthcare savings, it's essential to evaluate not just whether you can have an FSA and an HSA, but how to use them effectively together for your financial health. Utilizing both can maximize your savings potential.