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HSA-compatible FSAs: Maximize your employees’ savings


For most high-deductible health plan (HDHP) participants, flexible spending accounts (FSAs) are often overshadowed by the option of a health savings account (HSA). What most employees don’t realize is that they can utilize the benefits of both an FSA and an HSA to maximize their savings and plan for the future without having to choose one account over the other. While there are slight feature differences between the accounts, they can co-exist and provide separate — but beneficial — opportunities for your people via an HSA-compatible FSA.

Flexible Spending Accounts: No longer use it or lose it

Often referred to as a limited purpose or limited use FSA, this account allows employees to set aside pre-tax dollars to pay for eligible out-of-pocket dental or vision expenses. Based on an employer’s plan design, a limited purpose account can become full use after the employee has satisfied the health plan deductible. By contributing pre-tax dollars to an FSA, employees also reduce their taxable income, saving them money at the end of the year.

Unlike HSAs, FSAs are not linked specifically to HDHPs and are typically use-it or lose-it plans unless the employer takes advantage of the carry-over provision that allows employees to  roll over a maximum of $500 to the following year with no impact to the new year’s maximum. This is useful for those employees who are not participating in an HDHP while still giving the option for those who do to use both accounts together for maximized savings.

How do you eliminate employee confusion with choosing between an FSA or an HSA?

Start with the basics by educating them on the benefits. Make it clear to your people that the plans can coexist conveniently with no extra work for them; gone are the days of carrying around multiple debit cards as the accounts can be easily linked and accessed instantaneously. And with our mobile app and innovative payment systems, transactions can be seen in real time and balance information can be accessed immediately, including any reimbursement payments, outstanding claims or e-receipts.

Provide more flexibility with Dependent Care FSAs

The flexibility of this reimbursement account doesn’t stop there. In addition to a limited purpose FSA, employees can also save tax dollars by enrolling in a Dependent Care FSA.  Alight’s Dependent Care FSA administration solution allows pre-tax dollars to cover qualified child or adult daycare expenses, while actively working.  

No matter your employees’ situation, an HSA-compatible FSA can help maximize their savings while providing flexible options to support their needs. Want to learn more about our reimbursement account solutions or how you can optimize your employees’ savings?

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