Ask Penny:  Can I have two FSAs in one household?

August 27, 2019

It's not uncommon for there to be multiple FSA accounts in a single household if the adults in the home each have one through their employer. Since an FSA lets you apply tax-free dollars towards eligible medical expenses, it makes sense financially for everyone in the family to take advantage of the benefit. But understanding how to manage FSA accounts with different employers can be confusing.

The most important thing to remember when you have more than one FSA in your household is that each expense can only be reimbursed once. According to the IRS, any expense that's already been reimbursed is no longer eligible for any further reimbursement. Being reimbursed for a single expense more than once is commonly referred to as "double dipping."

Double dipping often happens when one person submits a claim on a medical expense, and then another person submits a claim on the same expense with their own FSA. In a household with more than one FSA, it's easy for this to occur.

Double dipping also applies to items purchased with an FSA debit card. If one person pays for an eligible expense with their FSA card, no one else can submit that same expense for reimbursement. Most benefits administrators catch these mistakes quickly. But if a claim does go through and you get reimbursed twice for the same expense, you'll have to pay it back.

Let's say you and your spouse each have FSAs through your respective employers. If you pay for a copayment or FSA-eligible product and submit a claim for that expense under both accounts, this is another clear example of double dipping. To avoid this, make sure to keep your FSA claims separate for each account to avoid confusion.

Regardless of which FSA you're submitting the claim to, you still need to provide detailed information about the service or items purchased. FSA administrators require you to acknowledge the no double dipping rule at the beginning of your plan enrollment. Whenever you submit a claim, you'll also be confirming that the expense wasn't already reimbursed and that you won't submit it for reimbursement elsewhere.

Not only is double dipping unethical, but it can result in severe consequences. If double dipping goes by unnoticed by the administrator, the whole plan could be considered non-compliant and everyone in your company could lose the benefit. Even worse, if the FSA plan was found to be out of compliance, all those tax-free benefits could instantly become taxable to employees and your employer may face harsh penalties.   

The best way to avoid double dipping is to keep track of your family’s expenses and claims in an organized way. Stick to the honest path: Use your FSA card whenever possible, keep receipts for everything purchased with an FSA card in one place, and always look through them before filing a claim to make sure it wasn't already reimbursed. Honest mistakes do happen, but by taking the necessary precautions, they can be avoided.

NOTE: If you have a limited-purpose FSA for dental and vision expenses in conjunction with an HSA, expenses already paid or reimbursed from an HSA are not a qualified expense for the FSA. This is also considered double dipping.