Is it Possible to Transfer Funds from an FSA to an HSA?

Recent years, our household has transitioned from an HDHP with an HSA to one without an HSA; having saved for several years previously and accumulated the maximum HSA contribution, we simply withdraw funds from that old HSA to cover current qualified medical expenses that fall outside the scope of PPO plans.

Now that we’ve had time with our PPO plan and seen out-of-pocket expenses accumulate over time, we have revisited our strategy and decided to add a flexible spending account (FSA) in order to avoid further depleting funds from our HSA and take advantage of having additional untaxed funds available for medical expenses. While calculating annual contributions during open enrollment for this FSA account I faced “use it or lose it” fears; while thinking through contributions I pondered an interesting thought: can funds from an FSA to an HSA account and vice versa.” So let’s dive in.

FSA to HSA Rollover: Can Funds Transfer Between Accounts (FSA and HSA) It is only natural to ask this question: The IRS offers generous retirement account rollover compatibility rules; you are able to transfer 401K funds directly into an IRA (and vice versa), HSA funds can even be moved between HSA accounts (for optimal results, consider one of our best HSA accounts if necessary), or from one type of qualified health expense account such as an FSA directly into another HSA. Given this knowledge, why wouldn’t funds also transfer between qualified health expense accounts like FSAs or HSAs?