When processing the transactions, if the items/services are eligible under both accounts, the system will pull funds based on the payment order settings, so that
if you don't have enough balance to cover the whole transaction, you can still pull funds from the secondary account.
As each plan has its accepted MCCs list, the payment order will be as followed:
FSA > LPFSA > HSA > DCFSA > Transit > Parking
For example, if I go to a dentist, which is an eligible merchant under LPFSA and HSA. The total transactions amount is $500, but I only have $400 left in the LPFSA. The transactions will pull $400 funds from the LPFSA first, then the HSA account for the rest. If you have enough balance in the LPFSA, the transactions won't pull any funds from your HSA account.
However, issues might arise if the merchant is not categorized under the MCCs correctly.
For example, if you go for a dental emergency at the hospital, you might be thinking of using your LPFSA to cover the expense. The MCC of hospitals, however, is not accepted under an LPFSA plan but the HSA. The transactions will only be able to pull funds from your HSA accounts.
If you would like to apply your LPFSA funds without using your HSA funds, please follow the steps:
Download the form and fill in all the information.
In Section 2, please select the Return of Mistaken Distribution, Current Tax Year, and Redeposit.
Mail the form along with the check for the amount to the address listed at the top of the form.
File a manual claim under the correct account that should be charged along with the receipt and proof of redeposit.
You will be reimbursed with the amount you redeposit to your HSA account once our review team approve your claim.