With open enrollment likely around the corner for many countless organizations—and ongoing onboarding operations throughout the year—HR administrators need to stay on top of essential benefits topics. For healthcare, one of the most common questions that may come up is whether or not users can own both a health savings account (HSA) and a flexible spending accounts (FSA).
Find out what users need to know about using HSAs and FSAs together.
A health savings account (HSA) is a personal bank account with significant tax advantages that can be used by an individual to pay for medical expenses, typically on high-deductible health insurance plans.
Meanwhile, flexible spending accounts (FSA) allow employees to set aside pre-taxed funds for healthcare or dependent care expenses. Keep in mind that HSAs and FSAs aren’t mutually exclusive—employees can utilize both of these benefits.
While there are restrictions on contributions for both types of accounts, there are three key differences between the two:
Yes, people can use an HSA and an FSA together, though there are some exceptions. FSAstore.com points out that because a flexible savings account is considered "other health coverage" per IRS Publication 969, a "run-of-the-mill" FSA likely won't be compatible with an HSA.
On the other hand, the same resource published by FSAstore.com indicates that employees can pair an HSA with a limited-purpose FSA or a post-deductible health FSA. The former FSA is mainly reserved for qualifying dental and vision expenses while the latter is reserved to pay for health expenses once an HDHP deductible has been met.
For HSA account holders, a little bit of understanding goes a long way. Key benefits for health savings accounts include:
On the other hand, individuals with FSAs benefit from the following:
By offering varied, flexible benefits to your employees during your company’s open enrollment period, you’re doing more than just showcasing the organization’s generosity. Strong benefits packages matter to workers.
Not only do they help recruit new employees, but benefits can improve your retainment efforts as well. Job-hopping has become a more common trend in recent years, but if you’re able to provide ongoing value for your team, these concerns can be mitigated.
Put another way, with proper education on the positives of both HSAs and FSAs—and a potent HRIS that helps you maintain and administer these benefits—you can make your team stronger in the short- and long-term.
You can stay informed, educated, and up-to-date with important HR topics using BerniePortal’s comprehensive resources: