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FSA and HSA Together: Limited-Purpose FSA Rules

Educational information only. Not tax, legal or financial advice. Check IRS.gov and your plan documents. Last checked against official sources: October 17, 2026. Examples use made-up numbers.

Short answer: Per IRS Pub. 969, an employee covered by an HDHP and a health FSA or HRA that pays or reimburses qualified medical expenses can't generally contribute to an HSA. You can contribute while covered by an HDHP and a limited-purpose or post-deductible health FSA (or certain other arrangements).

What is allowed alongside an HSA (Pub. 969)

Limited-purpose health FSA or HRA: can pay or reimburse the items listed for other permitted coverage (such as dental and vision care, but not long-term care) and preventive care.
Post-deductible health FSA or HRA: doesn't pay or reimburse any medical expense before the minimum annual deductible amount is met; its deductible needn't equal the HDHP's.
Suspended HRA and retiree-only HRA: also described in Pub. 969, with conditions.

The grace-period trap

Pub. 969 says coverage during a grace period by a general-purpose health FSA is allowed only if the balance in the health FSA at the end of its prior-year plan is zero. If you leave money in a general FSA with a grace period and then enroll in an HDHP with an HSA, you may be disqualified for months in the grace period. A plan with carryover can't also have a grace period.

Questions to ask

Is my plan limited-purpose or general-purpose?
If I have a grace period, is my balance zero at year end?
Does my carryover (if any) convert to a limited-purpose account when I choose an HDHP? (Pub. 969 doesn't answer this plan-level question.)

Unused FSA money · HSA limits 2027 · Mistakes

2027 health FSA limit: not announced. As of October 17, 2026 we found no IRS announcement of the 2027 health FSA salary-reduction or carryover limit (we are not repeating unofficial projections). The official figures we found are for 2026: $3,400 salary reduction and, if your plan allows carryover, up to $680 (Rev. Proc. 2025-32). Check your plan documents and IRS.gov.

FAQ

Can my spouse's FSA affect me? Pub. 969 discusses coverage generally; spouse FSA coverage can matter. We did not review the detailed rules here, so ask a tax professional.

Does a dependent-care FSA block an HSA? Our sources don't say it does; this page covers health FSAs only.

What we could not verify

Spousal coverage scenarios and plan-specific conversion rules.
Your employer's plan design.

Sources (official)

IRS, Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans (Feb 11, 2026 print; for 2025 returns) — https://www.irs.gov/publications/p969 (read October 17, 2026)
IRS, Rev. Proc. 2025-32 (2026 inflation adjustments, incl. health FSA $3,400 / carryover $680) — https://www.irs.gov/pub/irs-drop/rp-25-32.pdf (read October 17, 2026)

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Not tax/financial advice. Examples use made-up figures and have not been reviewed by a tax professional. See the disclosure.