Can I Have an FSA & an HSA at the Same Time?

Both flexible spending accounts and health savings accounts are a part of the move toward consumer-driven heath care and medical spending education. As long as you meet the requirements for an HSA, you can have both a flexible spending account and a health savings account at the same time, and holding both plans provides a number of important benefits, including tax savings.

Health Plan Requirements

• In order to have a health savings account, you must first have a high deductible health plan in place. Not all plans qualify as HDHPs, so you should check with your benefits administrator or insurance broker to make sure your plan qualifies. The plan must have a deductible of at least $1,200 for a single plan or $2,400 for a family plan.

Contribution Limits

• As of 2011, flexible spending accounts do not have a limit on contributions. However, many employers limit the amount their workers can put in, so check with your boss to see how much you can contribute. For 2011, you can contribute up to $3,050 to an individual health savings account, or $6,150 to a family HSA. The IRS reviews these limits each year and makes adjustments using a formula that includes the rate of inflation and a number of other factors.

Tax Savings

• Both flexible spending accounts and health savings accounts provide tax savings, and combining both accounts can maximize your tax savings. You can make your FSA contributions directly from your paycheck using pre-tax dollars, which lowers your taxable income and your tax liability. You can also take a tax deduction for your health savings account contribution, lowering your taxes even more. If you have the money and the free cash flow to contribute to both the FSA and the HSA, you can lower your tax bill substantially.

Prioritizing Spending

• If you do hold both an FSA and HSA, it is important to prioritize your spending to make the most of both accounts. Keep in mind that you lose any unspent money in your FSA at the end of the year, but the money in your HSA rolls over from year to year. That means you should spend the money in your FSA first, then use your HSA funds when the FSA is exhausted.