FSA, HRA and HSA Coordination for Employers
An HSA is only available to people with the right kind of health plan and no disqualifying account beside it. Most mistakes happen when a health FSA or HRA is added without asking how it interacts.
Why a General Purpose FSA or HRA Breaks HSA Eligibility
The statute does not permit contributions to an HSA while covered by a general purpose health FSA or HRA. IRS guidance describes the arrangements that avoid the problem.
The Basic Conflict
An individual must be covered by a high deductible health plan and no other health plan to contribute to an HSA. A general purpose health FSA or HRA that pays first-dollar medical expenses is that other coverage. To compare a high-deductible plan with a PPO, use our HDHP and PPO break-even calculator.
Limited Purpose FSA Or HRA
A limited purpose arrangement that reimburses only certain expenses such as dental and vision does not disqualify an otherwise eligible individual. Employers often use this design so employees can keep a health FSA for dental and vision costs and still contribute to an HSA. Write the limits into the plan document and explain them to employees at enrollment. For a quick estimate, use our free deductible HRA cost calculator.
Post-Deductible FSA Or HRA
An arrangement that pays or reimburses only after the minimum annual HDHP deductible is satisfied preserves eligibility. Where the deductibles differ, HSA contributions are limited to the lower of the two (Notice 2004-50). Employees should know the account may not pay medical costs until the deductible is met, if the plan is designed that way. Confirm the setup with the administrator and a tax adviser before relying on it.
Suspended HRA
An HRA where the employee has elected to forgo reimbursements for the coverage period, a suspended HRA, preserves eligibility for that period. This option lets employees who want to preserve HSA eligibility waive reimbursements for a period. The election has to be made in advance, so confirm the timing rules with counsel and the plan administrator.
Retirement HRA
A retirement HRA that pays only expenses incurred after retirement leaves a person eligible before retirement. After retirement the person is no longer eligible to contribute. An employee who is eligible now may lose eligibility after retirement under this design. Clear communication helps people understand when they can still contribute and when they can no longer do so.
The Grace Period Trap
Coverage by the FSA grace period disqualifies an individual from contributing to an HSA during the grace period, unless the FSA is amended appropriately (Notice 2005-86). If an employee wants to make HSA contributions, the FSA plan terms need to be reviewed carefully. Ask the plan administrator and a tax adviser whether the plan document includes a grace period, and how it affects each employee.
Rules for Running Them Together
Layered accounts need ordering rules so nothing is reimbursed twice.
One Reimbursement Per Expense
An individual may not be reimbursed for the same medical expense by more than one plan or arrangement. Plans should have a way to prevent duplicate payments across accounts and coverage. Employees should keep receipts and avoid submitting the same expense to more than one plan.
Ordering Rules
Where an HSA, a health FSA and an HRA could pay the same expense, the health FSA or HRA may pay subject to the ordering rules in Notice 2002-45, so long as the individual certifies the expense has not been reimbursed elsewhere.
Excepted Benefit FSAs
A health FSA is an excepted benefit for a class only if other group health coverage is available to that class and the maximum benefit is no more than two times the salary reduction election, or $500 plus the election if greater.
Why That Matters
Excepted benefit status generally keeps the FSA outside the group health plan market rules, which is why the structure is specified so exactly. The structure of an FSA matters because it determines which rules apply to the plan. Employers should review any change in design with counsel before it is announced to employees.
Direct Primary Care
For months beginning after December 31, 2025, a direct primary care arrangement with fees under $150 a month, or $300 for more than one individual, does not disqualify an HSA contributor (IRS Notice 2026-05). Fees the employer pays, including through Section 125 salary reduction, cannot be reimbursed from the HSA.
Telehealth
The HDHP telehealth safe harbor was made permanent by the One Big Beautiful Bill Act, retroactive to plan years beginning after December 31, 2024. Employers should check the plan terms before offering telehealth services ahead of the deductible, and make sure employees understand how the benefit works. Confirm the details with counsel or a tax adviser.
2026 Limits to Keep Nearby
Confirm every figure in IRS guidance before you print it in employee materials.
HSA Contributions
$4,400 self-only and $8,750 family for 2026. 2027 limits are $4,500 and $9,000.
HDHP Minimum Deductible
$1,700 self-only and $3,400 family for 2026.
HDHP Out-Of-Pocket Maximum
$8,500 self-only and $17,000 family for 2026.
Health FSA
$3,400 for 2026.
Dependent Care
$7,500 for tax years after 2025. See our dependent care guide.
More Detail
The full list is in our HSA, FSA and Section 125 limits guide.
Questions We Get About FSA, HRA and HSA Coordination
Can an employee have an HSA and a health FSA?
Only if the FSA is limited purpose or post-deductible. A general purpose health FSA disqualifies HSA contributions.
What is a limited purpose FSA?
A health FSA that reimburses only expenses such as dental and vision, so it does not duplicate HDHP coverage.
Does the FSA grace period affect HSA eligibility?
Yes. Being covered by the grace period disqualifies contributions during it, unless the plan is amended to address it.
What happens when someone has an HSA, an FSA and an HRA?
The ordering rules apply and the individual certifies the expense has not been reimbursed elsewhere.
Can an HRA be paired with an HDHP?
Certain HRAs can: post-deductible, limited purpose, suspended and retirement HRAs. A general purpose HRA cannot.
Can we pay for direct primary care through payroll?
Employer-paid fees, including through Section 125 salary reduction, are not the employee’s expense and cannot be reimbursed by the HSA.
What is an excepted benefit FSA?
One available only alongside other group coverage and capped at two times the election or $500 plus the election.
Where are the 2026 limits?
They are summarized above and in our HSA, FSA and Section 125 limits guide.
Is this legal advice?
No. This page is general information, not legal advice. Rules change and facts differ, so confirm your situation with your attorney or tax advisor.
Related Guides
Related reading: HSA, FSA and Section 125 Limits · ICHRA and QSEHRA Guide · Direct Primary Care · Section 125 Cafeteria Plans · Dependent Care Assistance Programs · HSA Comparability Rules for Employer Contributions · Excepted Benefit HRAs for Employers · Medicare Enrollment and HSA Contributions · Health FSA Carryover, Grace Period, and Run-Out
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Laws and rules referenced
26 U.S.C. § 223 — Health savings accounts: eligibility, contribution limits and the age 55 catch-up.
IRS Notice 2004-50 — HSA questions and answers: eligibility, other coverage, FSAs and HRAs, and contribution rules.
Rev. Proc. 2025-19 and Rev. Proc. 2026-24 — Inflation-adjusted HSA and high-deductible health plan amounts for 2026 and 2027.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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