Pairing Your HSA With a Limited FSA

August 13, 2016

If you offer a High-Deductible Health Plan (HDHP), you may already know that a Health Savings Account (HSA) is a powerful savings tool that allows your employees to contribute pre-tax dollars to use for qualified out-of-pocket medical, dental and vision expenses. You might even offer an HSA as an option today, and perhaps you’ve taken additional steps to encourage enrollment, like offering an employer contribution.

But when it comes to giving your employees a robust tool to save money for out-of-pocket costs, the HSA doesn’t have to be the only gadget in your toolbox. While employees enrolled in an HSA aren't eligible to participate in a General Purpose Flexible Spending Account (FSA) — where pre-tax dollars can be set aside to be used on out-of-pocket costs incurred during the plan year — they are allowed to enroll in a Limited Medical FSA while still contributing to an HSA.

How does a Limited FSA work?

A Limited FSA gives employees the same ability to set aside their pre-tax dollars, but in this case, the funds are reserved for eligible dental, vision and preventive expenses, which can add up quickly for many families. This allows your employees to truly maximize their savings by letting them tap into the Limited FSA for costs associated with dental, vision and preventive care while only using their HSA for qualified medical expenses. Better yet, when employees are able to use a Limited FSA for these expenses, they may be less inclined to tap into their health savings altogether — using it as a true savings account instead of another spending account.

Limited FSA Eligible Expense Grid

With the huge savings potential it could offer your employees, what’s not to love about a Limited FSA? If your answer is, “My employees don’t need one more account to add confusion to the mix,” we’ve got great news. Our Limited FSA is built to be offered alongside a Health Savings Account, which means employees can use the same benefits debit card, the same mobile app and the same online account to access their funds and account information! 

When you equip your employees with both an HSA and a Limited FSA, their savings will be anything but limited. Get in touch with us to learn more about offering these plans to your employees.

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