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Q&A: "Can You Contribute to Both an FSA and an HSA?"

Healthcare & Medicare Insurance

Question: 

Can you contribute to both an FSA and an HSA?

Answer: 

Yes and no.

You can't contribute to both an HSA and a general FSA. But you can contribute to both an HSA and a "limited purpose" FSA. A limited FSA will only reimburse for expenses like dental, vision, and certain preventive care. 

Even though you can't contribute to both an HSA and FSA at the same time, that doesn't prevent you from continuing to own your HSA and withdraw funds for eligible medical expenses.

Here's some context for readers who are new to the subject . . . 

Flexible Spending Account (FSA) 

An FSA is an employee benefit offered by some employers. With an FSA, you decide how much pre-tax contributions you want deducted from your paycheck and deposited to the account. In 2014, the maximum contribution limit is $2,500, or $5,000 if dependent care is involved, but your employer can restrict those.

You then use the money for your medical expenses during the year. But an FSA is a "use it or lose it" proposition . . . any unused amounts at year-end are forfeited. 

Health Savings Account 

An HSA is an account that you set up in conjunction with a High Deductible Health Plan (HDHP) and you make tax-deductible contributions to the account. In 2014, the HSA maximum contribution limit is $3,300 for an individual, or $6,550 for a family. Those age 55 or older can make an additional $1,000 catch-up contribution.

Unlike the FSA, amounts in your HSA account at year-end remain yours. Some like to refer to an HSA as a kind of "Medical IRA."