1. mjs says

    Wrong near the end!:

    “This also means it’s OK to have one person using an HSA and the other using an HRA, but it’s not OK to have one person using an HSA and the other using an FSA unless the FSA is a special limited-purpose FSA. Employers that don’t offer an HSA-qualifying plan typically don’t offer a limited-purpose FSA, which means if one spouse selects the HSA, the other spouse can’t enroll in the FSA from his or her own employer.”

    If a couple are under two different insurance plans, they are not on the other’s insurance plan, and only one plan has an HDHP/HSA option, it is perfectly acceptable for the non-HDHP/HSA spouse to enroll in a non-retricted medical FSA and pay his/her expenses (and any dependents on that plan) through that.

    What you can’t do is select “family” coverage (wich allows a higher HSA contribution limit from individual) under a HDHP/HSA unless you’re adding someone (e.g. dependent) who is not covered by the spouse’s coverage. Adding just one kid to get “family” status gets you a higher limit to put into your HSA, but it also has the risk of having more out-of-pocket expenses (since that kid could have been on the other plan where costs are pooled toward the plan’s medical deductables)

    If both plans have HDHP/HSA options, then yes FSA’s are limited, and you also can’t both contribute to FSA’s beyond their family contribution limit between you.

    These are all valid with no restrictions to FSAs (assuming no HDHP/HSA under Spouse 2’s plan):

    Example A (no kids): Spouse 1 “individual” HDHP/HSA, Spouse 2 “individual” FSA.

    Example B: Spouse 1 “individual” HDHP/HSA, Spouse 2 & Kids “family” FSA.

    Example C: Spouse 1 and Kid 1 “family” HDHP/HSA, Spouse 2 & Kid 2 “family” FSA.

    Example D: Spouse 1 and Kids “family” HDHP/HSA, Spouse 2 “individual” FSA.

  2. mjs says

    If both plans have HDHP/HSA options, then yes FSA’s are limited, and you also can’t both contribute to FSA’s beyond their family contribution limit between you.

    above should have said: “HSA’s beyond the overall family contribution limit”

  3. Lynne says

    I think HSAs are the future. Kill the rest.

    –More employers are going in the direction of HDHPs, so HSAs are becoming more widely available.
    –HSAs are the most flexible accounts, usable for current healthcare expenses, or as retirement savings, or a mix of both.
    –You don’t have to worry about use-it-or-lose-it, or changing employers as long as you keep an HDHP plan.
    –My colleagues, who are mostly younger than I am and don’t yet care as much as I do about benefits & savings & retirement planning, are so confused about all the different initials that they mostly don’t bother with any of them.
    –HRA? Really?

    • Steve says

      You only need to keep an HDHP (and only an HDHP) to contribute to the HSA account. You can have and withdraw from an HSA account even if you switch to non-HDHP health insurance later.

  4. harry @ 4HWD says

    I seriously don’t understand why every single person(in decent to good health) that has the option to go with an HSA doesn’t do it? It’s triple tax advantaged! Just do the math, HSA’s almost always come out ahead whether you use very little or a lot of insurance each year. If you consistently spend a few thousand every year, HSA’s might not come out ahead but who does that?

    You get the difference in premium, plus the employer contribution, plus your contribution and you can save your receipts and re-imburse yourself at ANY point in the future. I haven’t spent one penny of my HSA yet but I have a couple thousand in receipts that I can cash out tax free in 40 years. Over that 40 years, my couple thousand will compound tax free. I can’t make it sound any better.

    • Lynne says

      I agree HSA is best for most of us, but even without kids it’s pretty easy for a person with, say, a chronic illness that requires pricey prescription meds, to spend thousands of dollars a year.

      And not all HSAs are as good as yours apparently is. We don’t get an employer contribution, and the investment options in our HSA are poor; no index funds.

      I like using my employer’s HSA via Chase because I can contribute via payroll deductions without paying Social Security and Medicare taxes. I think I could legally open a second HSA somewhere with better investment options, and transfer money periodically from my original HSA (which I’d keep to take advantage of those pre-FICA deductions). But when I mentioned this to our HR department, they acted like their heads would explode. So for now I’m lobbying for better investment options in the Chase HSA.

    • JAB says

      I agree … I vote for HSA’s since they are THE most flexible accounts when it comes to paying lower taxes in retirement. Choosing an HSA while working was one of the best financial decisions I have made … invested my HSA contributions in a Vanguard fund for five years and never used the money for current medical expenses. (Saved all of my receipts, though.)

      Retired with spouse not yet eligible for Medicare. Bought Bronze HSA policy for her on the Healthcare exchange, contributed $4,350 to her HSA, and received premium credits that reduced her HC premiums to less than $50 month (based on taking only $32k of income this year) … using HSA tax free money I saved earlier for living expenses.

  5. Erik says

    My employer added the HRA this year. After hearing it explained to us, I was left with the impression that it’s most valuable for the lowest income category of employees that just find the normal/premium plan or HDHP too expensive. Maybe HRAs vary, but it just didn’t feel like I would ever consider one over HDHP w/ HSA.

    What I dislike about my health plan is that my employer charges a $100/month fee to have my spouse on the plan if the spouse can have insurance through their employer but decides against it. The same fee is there for my spouse’s plan if we were to both go on it. So we are left with the debate of whether to do separate plans and meet two deductibles or keep it simple and pay $100/month. What I think seems silly is that if an older employee has a spouse that is retired, they don’t have to pay this fee… so this older couple that is more likely to use health insurance pays less with no fee.

    But I digress. I love my HSA and Dependent Care FSA.

    • Harry says

      Yes HRAs vary. The one I mentioned happens to bundle with an insurance plan. Employers can also offer an HRA not linked to any insurance.

      Employers want to push people to get their subsidies elsewhere. Thus the surcharge for spouse who has the option to get his or her own coverage. Some employers also offer a credit for opting out. Can one of you take the HRA and go on the other person’s plan? The HRA would pay the $100/month surcharge.

    • Erik says

      “Can one of you take the HRA and go on the other person’s plan? The HRA would pay the $100/month surcharge.”

      I’ll be assessing this for 2015 because of your post. 😉

    • Harry says

      On second thought, if you want family coverage HSA, the HRA would invalidate it. Too complicated. 🙂

  6. D says

    I am trying to get my employer to add the vision + dental only FSA option for those who elected to go HSA. My kids will need braces soon enough, I could use another $2500 of pre-tax space.

    This is our first year in the HDHP/HSA. We have spent a fair bit on different things that have cropped up. The most amazing thing is how the list prices and provider network prices vary. Its pretty much impossible to model whether my net out of pocket is going to be more or less than the PPO I had before (w/higher premiums and not nothing deductibles). At the end of the day I guess I am happy to house another $6550 of tax advantaged dollars and I suspect it all comes out in the wash.

  7. Megan says

    Can a single person have an HRA account through their employer and still contribute to an HSA plan on their own as long as they have a high deductible plan? You mentioned about “one invalidating the other” in your replies, but I don’t quite understand.

    • Harry says

      To be able to contribute to an HSA, you must have only high-deductible plan, with nothing else paying for medical (dental and vision are OK). An HRA counts as medical coverage. That will make you ineligible to contribute to an HSA.

  8. Sai says

    I have this situation and hoping some experts can answer this here.

    I have HDHP with HSA at my work for my family and i can’t able register for dependent care FSA at my work as yearly enrollment is over for this year.

    Can my wife enrolled for dependent care FSA(not healthcare FSA)

    • Harry says

      Yes, she can. The FSA in this article is only the Health Care FSA. Dependent Care FSA is not affected by the health care choices.

  9. Mia says

    can they do it more complicated :-(((
    we have family of 3, always had 2 different health plans: spouse 1- self, spouse 2- self + child.
    both plans have been HDHP+HSA, no issues since 2006, contributed family max split between 2 HSA.
    This year employer of spouse 1 decided to do HDHP+HRA !!! only one option available. do i understand that correctly that Spouse 2 still can contribute to his HSA up to Family max? Spouse 2 HDHP+HSA covers self + child, that still makes spouse 2 eligible individual, right?

    • Harry Sit says

      You want to ask whether spouse 1’s HRA can reimburse expenses incurred by spouse 2 or child. If it can reimburse, regardless whether you actually request reimbursement or not, it will make spouse 2 ineligible for contributing to an HSA. In my example the HRA can only reimburse one’s own expenses but a different employer can set up the HRA differently.

  10. Jazzy says

    My husband has an HRA account and family health insurance through his work, and I set-up an FSA account through my work. Can I use the HRA account/debit card to pay any doctor’s visit (co-pay) of me, my husband, and child, and later to send the reimbursement form for my FSA?
    Can I use both or not?
    Or do I have to pay out of pocket first and ask for reimbursement thru FSA?

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