Can You Have Two FSA Accounts at the Same Time?

Flexible Spending Accounts (FSAs) offer a valuable way for individuals to manage specific out-of-pocket expenses with pre-tax dollars. These employer-sponsored benefits enable employees to set aside money from their paycheck before taxes are calculated, which reduces taxable income and lowers their overall tax burden. The primary purpose of an FSA is to help individuals cover qualified health care or dependent care costs throughout the year.

Understanding Different FSA Types

Several types of Flexible Spending Accounts exist, each designed for distinct purposes and eligible expenses. A Health Care FSA (HCFSA) is the most common type, covering a wide range of medical, dental, and vision expenses. Funds from an HCFSA can be used for items such as deductibles, copayments, prescription medications, and even certain over-the-counter products. This account helps individuals pay for costs not typically covered by their health insurance plan.

Another type is the Dependent Care FSA (DCFSA), which specifically addresses costs related to the care of eligible dependents. This includes expenses for childcare, such as daycare, preschool, and summer day camps, for children under 13 years old. It also covers care for a spouse or other dependent who is physically or mentally unable to care for themselves and lives in the account holder’s home. The DCFSA allows individuals to use pre-tax dollars for necessary care services while they work or look for employment.

A Limited Purpose FSA (LPFSA) is a specialized type of HCFSA, primarily restricted to dental and vision expenses. This account is often utilized by individuals who also participate in a Health Savings Account (HSA). The LPFSA allows for tax-advantaged savings on dental and vision costs without compromising eligibility for an HSA, which has stricter rules regarding other health coverage.

Rules for Multiple FSA Accounts

An individual cannot have two Health Care FSAs simultaneously, even if working for two different employers. However, spouses can each have a Health Care FSA through their respective employers. For 2025, the individual contribution limit for an HCFSA is $3,300, allowing a couple to set aside $6,600 in total.

You can have both a Health Care FSA and a Dependent Care FSA simultaneously. These accounts cover different types of expenses, medical and dependent care. For 2025, the Dependent Care FSA household limit is $5,000, or $2,500 if married filing separately.

The interaction between an FSA and a Health Savings Account (HSA) has specific rules. If an individual has a general-purpose HCFSA, they are not eligible to contribute to an HSA. To maintain HSA eligibility, a Limited Purpose FSA (LPFSA) is used. An LPFSA covers only dental and vision expenses, allowing it to coexist with an HSA.

Managing Contributions and Balances

Understanding annual contribution limits is important for managing Flexible Spending Accounts. The annual contribution limit for a Health Care FSA for 2025 is $3,300 per employee. The Dependent Care FSA has a household limit, which for 2025 is $5,000 for single filers or those married filing jointly, and $2,500 for married individuals filing separately.

FSAs are subject to the “use-it-or-lose-it” rule, which generally requires funds to be spent by the end of the plan year or be forfeited. Employers can offer options to mitigate this rule: a grace period or a carryover. A grace period extends the time to incur eligible expenses, typically by up to 2.5 months after the plan year ends. For a plan year ending December 31, this means funds could be used until March 15 of the following year.

Some plans permit a carryover of unused funds into the next plan year. For 2025, the maximum carryover amount for Health Care FSAs is $660. An employer can choose to offer either a grace period or a carryover, but not both. Careful planning of anticipated expenses is important to avoid forfeiting funds.