Question 1

Can I have both an HSA and an FSA at the same time?

Accepted Answer

Yes, but only under very specific conditions. You cannot have a general purpose healthcare FSA and contribute to an HSA simultaneously. However, you can have a Limited Purpose FSA (LPFSA) or a Dependent Care FSA alongside your HSA. An LPFSA restricts spending to dental and vision expenses only, which are always HSA eligible, preventing double dipping. This combination is often offered by employers as a package.

Question 2

What happens to my FSA money if I don't use it by year end?

Accepted Answer

With a standard FSA, you generally risk forfeiting unused funds under the 'use it or lose it' rule. However, many plans now offer one of two relief options: a grace period extending the deadline to March 15 of the next year, or a carryover allowing you to roll over up to $640 (for 2025) into the next plan year. You cannot have both a grace period and a carryover. Check your plan documents immediately during open enrollment.

Question 3

Are over the counter drugs eligible for HSA and FSA reimbursement?

Accepted Answer

Yes, as of the CARES Act, over the counter medications and products no longer require a prescription to be eligible for reimbursement from HSAs, FSAs, and HRAs. This includes pain relievers, allergy medicine, and menstrual care products. You can buy these items directly with your HSA debit card or pay out of pocket and submit for FSA reimbursement, saving sales tax in some states.

Question 4

How do I prove an expense is eligible if the IRS audits me?

Accepted Answer

You must keep documentation that shows the service or product was for a qualified medical expense, the date of service, the provider, and the amount you paid. This is your responsibility. Digital tools can help; many HSA providers like Fidelity and Lively offer receipt capture features. For an FSA, you submit this proof to your administrator for reimbursement. Store these records with your tax files for at least three years after filing the relevant return.

Question 5

If I leave my job, what happens to my HSA and FSA?

Accepted Answer

Your HSA is fully portable. You own it, so you keep the account and all funds. You can leave it with your former employer's provider or roll it over to a provider of your choice, like Fidelity. Your FSA is not portable. You lose access to the account, but you may still submit claims for expenses incurred while you were employed and covered. Any unused funds left in the FSA after your termination date are typically forfeited back to the employer plan.

Question 6

Can I use my HSA to pay for my spouse's medical expenses even if they are not on my HDHP?

Accepted Answer

Yes. IRS rules allow you to use your HSA funds tax free for qualified medical expenses for yourself, your spouse, and any tax dependents, regardless of whether they are covered under your HDHP. This is a major benefit for families where one spouse has a better non HDHP plan through their own employer. The expenses simply need to be incurred after the HSA was established.

Question 7

What is the biggest mistake people make with FSAs?

Accepted Answer

The most common and costly mistake is overestimating annual medical needs and contributing too much. Because of the 'use it or lose it' risk, you should base your FSA election on predictable, recurring expenses like copays, prescription refills, and planned dental work, not on optimistic guesses. Underestimating is safer. For 2026, the max employee contribution for a healthcare FSA is $3,200, but most people should contribute less.

Question 8

Can I invest the money in my FSA like I can with an HSA?

Accepted Answer

No. FSAs are spending accounts, not investment accounts. Funds are deposited and must be used for eligible expenses within the plan year. HSAs, on the other hand, often allow you to invest a portion of your balance in mutual funds or ETFs once it reaches a certain threshold, enabling long term growth for future healthcare costs in retirement. This makes the HSA a more powerful long term financial tool.

Question 9

What are the requirements to be eligible for an HSA?

Accepted Answer

You must be covered by a qualified High Deductible Health Plan (HDHP), have no other non HDHP coverage (with limited exceptions like dental, vision, or specific disease insurance), not be enrolled in Medicare, and cannot be claimed as a dependent on someone else's tax return.

Question 10

Can I open an HSA if my employer does not offer one?

Accepted Answer

Yes. You can open an HSA on your own with any provider that offers them, as long as you meet the HDHP eligibility criteria. You will miss out on any employer payroll tax savings, but you can still claim the income tax deduction on your personal tax return.

Question 11

When is the deadline to contribute to my HSA for a given tax year?

Accepted Answer

The deadline is the federal tax filing deadline, typically April 15 of the following year. For the 2025 tax year, you can make contributions up to April 15, 2026. Contributions made between January 1 and the tax deadline must be designated for the correct year.

Question 12

If I switch from an HDHP to a non HDHP plan mid year, what happens to my HSA?

Accepted Answer

You can no longer make new contributions to your HSA from the date you lose HDHP coverage. However, the existing funds remain yours to use for qualified expenses tax free. You can also use the funds for non medical expenses, but those withdrawals will be taxable and subject to a 20% penalty if you are under 65.

Question 13

Can I contribute to an HSA if I am covered by my spouse's non HDHP plan?

Accepted Answer

No. If you are covered by any non HDHP plan, including a spouse's plan, you are generally not eligible to contribute to an HSA. The only exception is if the non HDHP plan is a specific permitted coverage like dental, vision, accident, or disability insurance.

Question 14

Does having a Health Reimbursement Arrangement (HRA) affect my HSA eligibility?

Accepted Answer

It depends on the type of HRA. A general purpose HRA that pays for medical expenses before the HDHP deductible is met will disqualify you from HSA contributions. However, a Limited Purpose HRA or a Post Deductible HRA that only kicks in after you meet your HDHP deductible is usually compatible with HSA eligibility.

Question 15

What are the HSA contribution limits for 2026?

Accepted Answer

For 2026, the HSA contribution limits are projected to be $4,300 for self only HDHP coverage and $8,550 for family coverage. These are the total limits from all sources, including you and your employer. Individuals age 55 or older can make an additional $1,000 catch up contribution.

Question 16

How do HSA contributions reduce my taxes?

Accepted Answer

HSA contributions are triple tax advantaged. They go in pre tax (or are tax deductible), grow tax free, and come out tax free for qualified medical expenses. Contributions made via payroll deduction also avoid FICA taxes (7.65%), providing an extra savings that self employed individuals cannot get.

Question 17

What is the FSA contribution limit for 2026?

Accepted Answer

The healthcare FSA limit for 2026 is expected to be $3,200, up from $3,100 in 2025. This limit is set by the IRS and applies per employer. If both you and your spouse have access to an FSA through your jobs, you can each contribute up to the limit.

Question 18

What is the 'last month rule' for HSA contributions?

Accepted Answer

The last month rule allows you to make a full year's worth of HSA contributions if you are eligible on the first day of the last month of your tax year (December 1). However, you must remain eligible during a testing period for the entire following year. If you fail the testing period, the excess contributions become taxable and are subject to a 10% penalty.

Question 19

How are HSA contributions handled for a family with two working spouses?

Accepted Answer

The family HSA contribution limit is a single aggregate limit that applies to the entire family, regardless of which spouse's account receives the funds. You and your spouse must coordinate to ensure your combined contributions do not exceed the family limit. Both spouses can make catch up contributions to their own accounts if they are 55 or older.

Question 20

Can I change my FSA contribution amount during the year?

Accepted Answer

Generally, you cannot change your FSA election during the plan year unless you experience a qualifying life event, such as marriage, divorce, birth/adoption of a child, or a change in your or your spouse's employment status. This rigidity is why accurate upfront estimation is so important for FSAs.

Question 21

Are gym memberships or fitness equipment HSA or FSA eligible?

Accepted Answer

No. General health club memberships, fitness classes, and home exercise equipment are not considered qualified medical expenses by the IRS. The only exception is if a doctor specifically prescribes them as treatment for a diagnosed medical condition, such as physical therapy for cardiac rehabilitation or obesity.

Question 22

Can I use my HSA for mental health therapy and treatment?

Accepted Answer

Yes. Payments to psychiatrists, psychologists, licensed clinical social workers, and other licensed mental health professionals for diagnosis, treatment, and prevention of mental illness are qualified medical expenses. This includes therapy sessions, prescribed medications, and treatment at a qualified facility.

Question 23

Is dental work like cleanings, fillings, and braces eligible?

Accepted Answer

Yes. Preventive care like cleanings and X rays is eligible. So is treatment for dental disease, including fillings, extractions, root canals, and dentures. Orthodontia (braces) is also eligible, but cosmetic procedures like teeth whitening are not. These expenses are perfect for a Limited Purpose FSA.

Question 24

Can I pay my health insurance premiums with HSA or FSA funds?

Accepted Answer

Generally, no. You cannot use these accounts to pay for health insurance premiums. Exceptions include paying for COBRA continuation coverage, health insurance while receiving unemployment, or Medicare premiums (Part B, Part D, and Medicare Advantage plans) after age 65. Long term care insurance premiums may also be eligible subject to age based limits.

Question 25

What is the process for getting reimbursed from my FSA?

Accepted Answer

You pay the provider out of pocket first. Then, you submit a claim to your FSA administrator with an itemized receipt or Explanation of Benefits (EOB) from your insurance showing the patient responsibility amount. Many FSAs now provide debit cards you can use at the point of sale for eligible merchants, simplifying the process.

Question 26

Can I use HSA funds for non medical expenses after age 65?

Accepted Answer

Yes, but with tax implications. After age 65, you can withdraw HSA funds for any reason without the 20% penalty. However, the withdrawal will be treated as ordinary income and subject to income tax, similar to a Traditional IRA distribution. For qualified medical expenses, withdrawals remain completely tax free.

hsa/fsa: Your Questions Answered

Eligibility and Enrollment Rules

Contributions, Limits, and Taxes

Using Funds and Eligible Expenses

Summary

Pro Tips

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