Can I Have Two FSA Accounts in One Year?

A Flexible Spending Account (FSA) allows individuals to set aside pre-tax money from their paycheck to cover eligible healthcare or dependent care expenses. This reduces taxable income. While typically an individual participates in one health FSA at a time, specific circumstances and account types can allow for holding multiple FSAs within a single year.

The General Rule for Health FSAs

A single individual typically maintains one general-purpose Health FSA through their employer. These accounts are employer-sponsored, with funds contributed through pre-tax payroll deductions.

Health FSAs operate under specific rules, including the “use-it-or-lose-it” provision, which meant any unspent funds at year-end were forfeited. However, employers can offer options to mitigate this. A grace period allows an extension of up to 2.5 months into the new plan year to incur new expenses. Alternatively, some plans permit a limited rollover of unused funds to the next plan year, with the maximum carryover amount for 2025 set at $660. Employers can offer either a grace period or a carryover, but not both.

Scenarios Allowing Multiple FSAs

Several situations permit an individual to participate in more than one type of Flexible Spending Account or multiple accounts across different employers within the same year, compliant with IRS regulations.

Health FSA and Dependent Care FSA

An individual can concurrently participate in both a Health FSA and a Dependent Care Flexible Spending Account (DCFSA). Health FSAs cover medical, dental, and vision expenses, while DCFSAs are for childcare or adult dependent care costs that allow an individual to work. Holding both simultaneously is permissible due to their separate purposes.

Spouses with Separate FSAs

When both spouses are employed by different companies that offer FSAs, each spouse can elect to have their own individual Health FSA. The IRS contribution limits for Health FSAs apply per individual, not per household. Each spouse can contribute up to the annual limit in their respective employer’s plan.

Job Change Mid-Year

A job change mid-year can result in an individual having access to two different Flexible Spending Accounts within the same calendar year. When an employee leaves a job, their participation in the former employer’s FSA generally terminates. They can then enroll in a new FSA offered by their new employer, even within the same plan year. Funds from the previous FSA usually cannot be transferred.

Limited Purpose FSA (LPFSA)

Individuals enrolled in a High-Deductible Health Plan (HDHP) and a Health Savings Account (HSA) are generally not eligible for a general-purpose Health FSA. However, they can have a Limited Purpose FSA (LPFSA). An LPFSA covers only vision and dental expenses, and sometimes preventive care, allowing pre-tax dollars for these specific costs while maintaining HSA eligibility.

Navigating Contribution Limits

IRS contribution limits apply per individual for Health FSAs. For 2025, an individual can contribute up to $3,300. If both spouses have their own Health FSAs through separate employers, each can contribute up to this limit.

The Dependent Care FSA (DCFSA) limits apply per household. For plan years starting on or after January 1, 2026, the maximum DCFSA contribution limit will increase to $7,500 per year for individuals or married couples filing jointly. If married and filing separately, the limit is $3,750 per year.

When an individual changes jobs mid-year, their contribution limit with the new employer typically resets, allowing them to elect the full annual amount. This is because the limit is tied to each employer’s plan, not a cumulative individual limit across all employers in a year.

A Limited Purpose FSA (LPFSA) shares the same contribution limits as a general-purpose Health FSA, which is $3,300 for 2025. Contributions to an LPFSA do not impact HSA eligibility.

Managing Multiple Accounts

Record Keeping

Maintaining accurate and separate records for each FSA account is essential for proper claim substantiation. Each FSA administrator requires specific documentation, such as itemized receipts or an Explanation of Benefits (EOB), to verify eligible expenses. The IRS mandates this substantiation.

Avoiding Double Dipping

It is crucial to avoid submitting the same expense for reimbursement to more than one FSA account. This practice, known as “double dipping,” is prohibited by the IRS. If an expense has already been reimbursed by one account, it is no longer eligible for reimbursement from another. Administrators typically require participants to certify that claims have not been reimbursed elsewhere.

Understanding Plan Specifics

Each employer’s specific FSA plan may have unique rules regarding features like grace periods, carryovers, claim submission deadlines, and eligible expenses. Review the Summary Plan Description (SPD) or consult with the plan administrator for each account to understand these individual rules.