Limited FSAs for HSA Owners

A limited flexible spending account (FSA) is a pretax, money-saving option used in conjunction with a high-deductible health plan (HDHP) and health savings account (HSA) to help cover specific health care expenses.

Can an employee enroll in a traditional FSA alongside their HSA and HDHP?
Employees contributing to an HSA are not eligible for coverage under a traditional FSA. A limited FSA is their sole option.

What expenses are eligible under a limited FSA?
Expenses are limited to dental, vision, and preventive care. The limited FSA can also reimburse medical expenses incurred after the HDHP deductible is met. Some examples are:

• Dental: cleanings, fillings, crowns, orthodontics
• Vision: contact lenses, eyeglasses, refractions, vision correction procedures
• Coinsurances, copayments, and other medical expenses incurred after the HDHP deductible is met

Whose expenses will it cover?
The employee, spouse, and any qualified dependents can be covered under this plan.

What is the contribution limit?
The employer sets the contribution limit, as with a traditional FSA.

Do the funds contributed toward a limited FSA carry over?
A limited FSA is not a bank account and does not belong to the contributor. These funds will not carry over from year to year and cannot be transferred into an alternate account. They are "use-it or lose-it" funds.

Why contribute to a limited FSA in addition to an HSA?
Funds contributed toward a limited FSA are above and beyond the contribution limit of an HSA. By contributing to a limited FSA, you save more money on taxes and create another means of paying some medical expenses while allowing your HSA to grow tax- free. The limited FSA funds can also be used to cover costs incurred once the HDHP deductible has been satisfied.