During benefits open enrollment at my employer, I signed up for both Health Savings Account (HSA) and Flexible Savings Account (FSA) for next year.
You may have heard that you can’t contribute to both HSA and FSA in the same year. It’s not true. You can contribute to HSA and FSA in the same year.
First of all, if the FSA is a dependent care FSA, you can definitely have it in conjunction with HSA.
Second, if your health care FSA and HSA don’t overlap, you can contribute to both in the same year. For example if you have FSA with one job and you join another company that offers a high deductible plan with HSA, you can sign up for the HSA for the remaining months. If you are aggressive, you can invoke the “last month rule” and contribute the full year maximum to your HSA.
Last, which is the case for me, you can contribute to both HSA and health care FSA in overlapping months in the same year as well, if the FSA is a limited purpose FSA or a post-deductible FSA.
A limited purpose FSA covers dental, vision, and other eligible expenses, but not medical or prescription drugs. A post-deductible FSA kicks in only after you satisfied the deductible in a high deductible plan. I’ve never seen a post-deductible FSA. If your employer offers an HSA-eligible medical plan, it likely will make the FSA a limited purpose FSA for those who sign up for the HSA plan.
Why do you want to contribute to a limited purpose FSA in addition to the HSA? Because you want to save more pre-tax dollars. Just use the money in the limited purpose FSA to cover dental, vision, and other eligible expenses and save more of your HSA dollars for the future.
Some dental and vision expenses are predictable. If you need a dental implant or if your kids need braces, you have the treatment plan. You know roughly how much you will pay out of pocket. If you wear contact lenses, you know how much they cost over the course of a year and how much insurance will cover. Use a limited purpose FSA to cover these expenses instead of taking money out of your HSA or paying out of pocket with post-tax dollars.
FSAs have become more flexible since the IRS allowed employers to add a 2-1/2-month grace period or a $500 rollover for unused dollars. My employer chose the $500 rollover option. When unused dollars in a limited purpose FSA roll over to the following year, they stay as limited purpose and they don’t interfere with the HSA.
What you can’t do is to contribute to an HSA and have a general purpose health care FSA for overlapping months, and if you are married, your spouse can’t have a general purpose FSA at the same time either, regardless whether the two of you are on the same health plan or whether you actually request reimbursement from your spouse’s FSA. Just the fact that you are eligible to have your medical expenses reimbursed from your spouse’s FSA disqualifies you from contributing to an HSA.
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Gregg says
Harry,
Thanks for this article and interesting to note you are still getting questions after a couple of years. Here is my situation (all plans mentioned run on a calendar year). My wife quit her job and had carried the medical insurance as well as having an FSA. I currently have a non-limited FSA as well (probably wasn’t supposed to do that) but now would like to pick up my insurance based on the qualifying event. We offer an HSA where I work. Am I able to stop my current FSA and elect the HSA for the current plan year based on the qualifying event? If so, what is the max I can contribute to my family HSA for 2019? With respect to the FSA that would be cancelled mid-year (probably June 30th), would I be able to recover expenses from the FSA as long as the care is provided prior to June 30th?
Harry Sit says
You have to ask your employer whether they allow you to stop the FSA. I’m guessing no. If you are able to stop the FSA on 6/30, you can contribute to the HSA at either 1/2 the annual limit (prorated July to December) or the full annual limit if you invoke the “last-month rule” with a commitment to stay with an HSA-eligible plan through 12/31 of the following year. If you are able to stop the FSA you are still able to make claims for expenses incurred before the end date.
Harry Sit says
If your employer doesn’t allow you to stop the FSA, also ask if they are able to turn your FSA into a limited-purpose FSA after you enroll in the HSA-eligible plan.
Gregg says
Harry,
That is interesting. My employer seems to be telling me to consult with a tax adviser and noting the IRC 125 code section with respect to stopping the FSA mid-year. In another words, does the IRC allow for this? There is a consistency rule which I have a hard time interpreting, but if the IRS allows for this and no “rules” are broken then I believe they will allow for it to happen.
Thanks so much for your help.
MK says
At the beginning of the year, my employee makes my FSA funds available for use. Over the next 26 pay periods I contribute toward the amount I chose to elect, $500 in this case.
I have just spent the last remaining funds in this regular FSA.
I am also contributing to dependent FSA, up to the max of $5000. This should not affect my situation, as I understand it.
I opened my HSA on 6/1/19 so there is some overlap, and I plan to contribute the max allowed amount, $7000.
Harry Sit says
The dependent care FSA does not affect your HSA contributions, but if you are still contributing to the regular healthcare FSA (not a limited-purpose FSA; didn’t change jobs), it makes you ineligible to contribute to an HSA. The fact that you already spent the full amount doesn’t matter.
MK says
So my employer provided me with the FSA funds at the beginning of the year, and I contribute the $19.32/pay period toward the FSA. In essence I am contributing towards my FSA for the rest of the year.
I opened my HSA in June and have been contributing towards it…
What should my next steps be?
Harry Sit says
The place that has your HSA has a procedure to withdraw excess contributions. Contact them and follow that procedure. Don’t just withdraw the money on your own without telling them.
MK says
What are the excess contributions?
I will only have contributed $500 toward FSA for the year (actively contributing $19.23/bi weekly pay check).
Since opening my HSA, my employer has contributed $266 and I have contributed $1750.
There will have been a two month overlap since opening my HSA (june 1) and using all remaining funds in the FSA.
Harry Sit says
Ask your employer whether they automatically switched your FSA to a limited-purpose FSA when you started HSA. If they didn’t, and your FSA will continue through December 31, all the contributions from both your employer and you are excess contributions. When exactly you used up your FSA funds doesn’t matter.
MK says
When logging into my FSA account online (FSAFEDS), it still shows it listed as a Health Care FSA. I doubt my employer would automatically make the switch to a limited-purpose FSA.
Are the excess contributions only considered for what is contributed into my FSA? If so, that will only be about $250 or so.
Harry Sit says
The excess contributions are the money contributed to your HSA. You are eligible to contribute $0, but your employer and you contributed $2,016. The amount above your eligibility is excess.
MK says
So I should stop any future contributions immediately?
What do I do for the amount I already contributed?
Harry Sit says
If your employer will continue contributing, let them continue through the end of the year and then follow your HSA provider’s procedure to withdraw excess contributions at that time. The employer money will be taxable but it still beats getting nothing. Find the section on “Excess Contributions” in IRS Publication 969 (pages 7-8).
MK says
thanks..
So I’ve stopped my contributions and plan to withdraw them as excess contributions. I will plan to pay taxes on what I contributed, in addition to what my employer contributed throughout the year.
Ann says
I am having surgery 5 days before the new insurance plan year. Can I put the deductible on a credit card and reimburse myself using the next year’s FSA monies or can I use HSA monies from a prior HSA account?
Harry Sit says
FSA – no, because it goes by the date of service. HSA – yes, because you already have the money.
Zachary Fair says
Can dependent care FSA money be redeemed after quitting a job if the expenses occurred before quitting?
Harry Sit says
Yes, and unlike health care FSA, dependent care FSA can continue reimbursing for expenses incurred after termination as well (but still within the same year).
RT says
Hi Harry,
Our family insured via HDHP through my spouse employer. My spouse contributes to HSA (maximum allowed).
Can I sign up for LPFSA with my employer and contribute as well?
Harry Sit says
If your employer offers one, yes, but I haven’t heard any employer offering a limited-purpose FSA if you don’t enroll in the HDHP/HSA through them.
irena gumb says
Hi,
If we choose the high deducible with HSA as the family coverage through my husband’s employer (it would cover my husband, myself, and our two kids), can I choose the full 5K dependent FSA with my employer although we’re obviously not choosing my employer’s offered medical coverage.
Thanks!
Harry Sit says
Dependent Care FSA for childcare expenses is totally separate from HSA for healthcare expenses. No problem with having Dependent Care FSA together with HSA. For the most part we are talking about Health Care FSA here.
Alberto Ortiz says
Irena,
My understanding is yes since FSA is per employers and must be used in the year is deducted. If you meant HSA instead, the HSA to my understanding has to be a different account and you probably (not certain) may have to file taxes separately. My suggestion is to read the IRS directive for FSA/HSAs and double check with your tax professional.
Honeylet says
Hi Harry,
Me and my kids are insured via HMO and I opened an FSA account, our coverage is April 2019-March 2020.
My husband is under his employer’s insurance and they are switching to HDHP with HSA on January 2020.
I am not planning to enroll in FSA on our next enrollment but with the 3 months overlap, does it mean my husband and his employer is not allowed to contribute to HSA account for 2020 or allowed only 9/12 months?
Harry Sit says
If you spend all your FSA money by the end of March 2020, your husband and his employer can still contribute 9/12th of the annual maximum for 2020. If you have FSA money left and your employer carries over the money to the following plan year, then his HSA contributions will be further limited or disallowed.
Hongyan says
Hi Harry,
starting from 1/1/2020 to 12/31/2020, I have PPO (non HSA) + FSA contribution with my employer and my husband has HDPD + HSA contribution with his employer. I did not realize this is not allowed until now reading your article. While I thought I need to ask my husband to withdraw all excess funds in his HSA in 2020 year because my FSA contribution would make his HSA contribution limit zero, I noticed that my employer opened my FSA as a “limited purpose” FSA. I don’t know why it is the case and will need to call my FSA custodian to confirm/understand. But if it is indeed a limited purpose FSA, then it is ok to keep it as it is, and have my husband contributing to his HSA as normal? Or I should have my employer correct my FSA to general purpose FSA and have my husband withdraw all excess HSA funds? I guess the answer lies in whether people with PPO (non-HSA) are eligible for a limited purpose FSA? Thank you in advance.
Harry Sit says
If it is indeed a limited purpose FSA, you can keep it. You can only use the FSA money for dental and vision expenses.
Sam Cook says
Hi Harry,
My entire family was on my Health Plan (PPO) and GPFSA for Jan & Feb of 2019. During these two months the required monthly amounts were deducted from my paycheck for the GPFSA , but as we had incurred significant medical expenses during that period I was able to get reimbursed for a lot more than what I had put into the FSA during that period. I happened to resign from my job at the end of February and expected to have to pay back the overage to my employer but they have not asked me for this amount.
From March through August 2019 we signed up for a non HDHP through healthcare.gov.
From Sep to Dec 2019 the entire family has been on my wife’s HDHP plan and we have not signed up for FSA coverage through her employer.
She opened an HSA plan in December and funded it with $2,332 for the four months we thought we were eligible in 2019 (Sep thru Dec).
The people that are preparing our taxes are saying that we should not have contributed to the HSA in 2019 and that we will have to pay a penalty.. are they correct ?
Harry Sit says
From what you described, your tax preparers are not correct. Your FSA coverage ended when you terminated employment. Your former employer is not entitled to any repayment of the overage.
Joe says
My wife has an FSA through her work, for which she elected to contribute the maximum allowed for the year ($2750). We have already used up this FSA amount in medical claims during the first half of the year.
If I start a new job next month and get a high deductible plan, can I also get an HSA? I was not sure if the fact that we already used up the FSA funds in full means that there is no technical overlap because I would have an HSA during the months when there is no more FSA funds we could use.
Thanks!
Harry Sit says
The FSA gives you coverage for the full year. Using up the money early doesn’t make any difference.
Joe says
Thank you. Just to clarify when you wrote that switching jobs would enable getting an HSA with one employer and an FSA with the other employer, that non-overlap works only because switching jobs makes it possible to get both in the year? And that is why that situation is unique?
In this scenario of switching jobs, I assume that the spouse has no FSA available (otherwise one switching jobs does not matter because the spouse’s FSA would prevent one getting an HSA with either employer)?
Harry Sit says
If your spouse has the FSA, just you changing jobs still doesn’t make you eligible. If you have the FSA but your spouse doesn’t, then changing jobs will terminate that FSA and make you eligible.
JamesL says
Great info, much appreciated! Just wanted to make sure I understand: I am starting a job soon and would plan to sign up for the high-deductible health plan with HSA option. The company also offers a HSA-compatible FSA, so I would like to get it as well. However, my wife has a standard FSA through her work, so can I still sign up for the HSA and/or HSA-compatible FSA through my work? Or would I not be eligible for either because my wife has a standard FSA?
Harry Sit says
Because your wife has the standard FSA (assuming the plan year is the calendar year), you aren’t eligible to contribute to the HSA this year. If your employer contributes to the HSA when you choose the high deductible plan, you can withdraw the employer’s money as excess contributions. The money will be taxable but it’s like extra salary. You can still sign up for the limited-purpose FSA, but keep in mind the use-it-or-lose-it rule.
JamesL says
I did not realize that I could at least have the employer contribute to the HSA (even if I am not allowed to contribute) and take that out as an excess contribution like you suggested, that’s good to know! And that I could still contribute to a limited-FSA even if I cannot contribute to the HSA portion. Really appreciate your help!
Sophie says
My husband and I are working on our 2019 taxes that are due in a few days and realized that I have an HSA (with max contributions from me and my employer) and my husband has a PPO health plan with FSA. I will call my HR Benefits on Monday because they never said explicitly that if a spouse has FSA then I cannot get HSA, but I guess here we are… Just wondering:
1. What do you suggest we do if it is not too late to try to fix it? I have not had HSA distributions in case that helps.
2. While working on our taxes, the software program did not seem to indicate there was an issue with the HSA and FSA or show any tax implications. Does that mean that we will get a notice from the IRS later with a penalty for us to pay? Does the IRS even have a way to figure out the HSA and FSA combination if the software didn’t even tell us about it?
Harry Sit says
Even though they don’t make it easy for us, and the chance of getting caught is very low, we still follow the law and the rules, because it’s right thing to do. Look up “excess contribution” in IRS Publication 969 (starting on bottom right of page 8).
https://www.irs.gov/pub/irs-pdf/p969.pdf
In short you follow the special procedure from your HSA provider and withdraw the excess contribution. They will calculate and send you the earnings as well. You include the excess contributions and earnings as income and pay tax on the income. Don’t just withdraw on your own. Contact your HSA provider.
Because it’s very close to the tax filing deadline now, you probably need to file an extension.
James says
Thanks for the great info! I just started a new job, and I want to invoke the last-month rule so that I can contribute the max to the HSA this year. I was wondering about the testing period that requires me to stay covered for 12 months in a HDHP plan.
1. Does the 12 month testing period start counting as of August 2020 (when I started work) or December 2020 (last-month rule date)?
2. Does the 12 month testing period require me to stay with a HDHP plan during that time or just stay with the same employer? So I cannot switch in 2021 to a PPO plan for example?
Harry Sit says
The testing period starts in January 2021 and ends in December 2021. You must stay in an HDHP in all 12 months.
Leonard says
I started a job and want to sign up for the HDHP plan. My kids were on my wife’s PPO plan, but we want to put them on mine. I also want to max out the HSA family amount under the last-month rule. Just wondering about the following scenarios to help us plan for the upcoming year benefits enrollment:
– What happens if for next year my kids go back on my wife’s PPO plan, but I stay as a single in my HDHP? Does that satisfy the 13-month rule of staying in a HDHP plan or is it a problem if my kids leave the plan?
– What if we all go on my wife’s HDHP plan with her employer next year? Would that meet the 13-month rule because I would be technically on a HDHP plan (even if it is through her employer) or is the rule that I must stay on my same plan that I used the last-month rule?
Thanks so much!
Harry Sit says
You only have to remain an “eligible individual” in the following 12 months. Your coverage level can change from family to individual, and your plan doesn’t have to be the same plan or from the same employer.
Jess says
Hi Harry,
I realize that I cannot *contribute* to HSA while I’m covered under the General Purpose Flexible Spending Account (GPFSA). However, can I get *reimbursement* for health expenses from my HSA account (via old contribution from previous years) while I’m covered under GPFSA? I ask because I’ve fully used up the funds in my FSA account, and want to keep my recent prescription receipts to get future reimbursement if allowed. Thanks in advance for your insight.
Jessica says
Yes, as long as they were not already reimbursed from the general purpose FSA.
Cory says
Hello — I enrolled in a HDHP plan mid-year with my new job and I decided to contribute the annual max to the HSA based on the last-month rule. As a result, I realize that I need to stay covered in a HDHP next year for the testing period. Can I join next year the HDHP plan with my wife that her employer offers? Just checking that joining her HDHP plan for the whole year would satisfy my testing period rule or if I have to still be the primary on the HDHP.
Harry Sit says
Joining her HSA-eligible plan will satisfy your testing. See reply to comment #119.
Ernest H. says
Hi! My wife and I are figuring out how much to contribute towards our HSAs for next year to max out the $7,200 family contribution (as married filing jointly) for next year. We are each signing up for our own employer’s HSA as individuals to get both the employer HSA contributions. I understand that we have to split up between ourselves the remaining $7,200 minus all employers contributions.
My wife earns much more than me and she already pays the annual max of the social security tax, but I am under this limit cap. So we are thinking of putting all the remaining HSA contributions from me.
Does it matter if the HSA contribution gets deducted from me or her (if we file married jointly)? Or does deducting the HSA from me means that there is less payroll tax for social security, but if it were from her then she is already taxed the most for social security and we miss out on this slight “tax savings”?
Thanks!
Harry Sit says
If the contributions come from your paychecks versus hers, you will pay less in Social Security and Medicare taxes, but it also reduces the Social Security benefits based on your earnings records. If your expected Social Security benefits are less than half of hers and you expect to claim based on her earnings records rather than yours, then it doesn’t matter that the benefits based on your records will be reduced.
Ernest says
Thank you! Quick follow up – I assume that the same applies to FSA contributions? We are deciding how to allocate dependent care FSA deductions (combined $5,000 annually) between my wife and I, so just wanted to confirm that we should think of it the same way as HSA payroll deductions (such as how it would impact social security taxes today and also the earnings record in the future) when deciding how to split it. Thanks again!
Harry Sit says
Yes, it’s the same for dependent care FSA and limited-purpose health FSA for dental and vision.
Rose says
Hello! Great information here—thank you!
My scenario is that my husband enrolled in a HDHP and, not realizing the ramifications, I signed up for my employer’s general FSA. Mine took effect Jan. 1 but no employer contributions have been made. My HR and rep are saying that there is a possibility that they can revoke/stop the plan for me. But my husbands employer will make a contribution this month to his HSA. My question, is—if my FSA can be revoked, will we have to withdraw my husband’s employer HSA contribution for the month? Can we then continue with his HSA this year? Or will it still appear that I had coverage?
Thank you!
Harry Sit says
If the FSA election is revoked retroactively as if you never chose it, your husband’s HSA won’t be affected. If the FSA election is stopped in January and any money in the FSA is forfeited or is only available for expenses incurred in January, then it only affects January. Your husband’s HSA will have 11/12th of the annual limit. You just contribute a little less but you won’t have to withdraw the employer contribution to the HSA. You have to be completely out of the FSA, not just stop putting money into it or spending the money down to zero.
Micaela Ayers says
Helpful!
Keith says
Hi! Thank you for all the relevant information! I ended my old job on Jan 5, 2021 and contributed to a general health FSA. I am starting a new job on Jan 19, 2021 and the new job only has HDHP with an HSA. My wife does not have her own insurance, so my thought is I can contribute to the HSA because they do not overlap. That said, in your post I did notice you said the following: “What you can’t do is to contribute to an HSA and have a general purpose health care FSA for overlapping months…” The months part has me wondering whether contributing will be an issue. There’s definitely no overlap with the FSA but presumably I’ll start contributing end of this month. That said, my health insurance for the old job technically lasts until the end of the month. Should I ask my employer to delay health insurance and the FSA contribution until Feb 1 (not sure that’s even doable)? I’d like to max the HSA out if I can (which includes 3k from the employer), but I guess that would also require me to ensure I stay with the employer for most of 2022, right? Hope I’m not repeating questions here, but didn’t notice this exact situation in the list. I’d really appreciate your thoughts! Thank you!
Harry Sit says
The HSA eligibility is determined on the 1st of each month. Because you didn’t have an HSA-eligible plan on January 1, your contribution limit is 11/12th of the annual limit. If you had it on January 1, it would overlap with the FSA and make you ineligible anyway. While you can use the “last month rule” to qualify for the full annual limit, you only gain 1/12th of the limit with the additional commitment for 2022, which isn’t worth it. So just stay with 11/12th of the annual limit.
Alberto says
Hello Keith,
Wouldn’t worry about the overlap it is not significant IMO but if you want to be that detailed the answer is yes. You could defer your medical until Feb 1st. Actually you could decline medical all together and get your employer to compensate you. Seen several ex-military retirees do that.
Max the HSA is a good idea but make sure you file your taxes as a family HSA so everyone can use it. Other than taxes they do not check things that closely. We had FSA and HSA at the same time. We estimated the doctor visits, prescriptions, dental, glasses and did thst in an FSA for the year. Took of 10% to make sure we didn’t over contributed. Good luck!
Keith says
Thank you! If I only contribute 6600 (11/12), do I need to ensure my HSA and HDHP start no sooner than 2/1/21, or does that not matter? Thanks again.
Alberto says
LOL! No it does not matter.
In the absence of anything else, I have a question.
What exactly is the consequence if you do 12/12 and who is checking?
Harry Sit says
When you put down a number on your tax return, you’re saying you’re eligible to contribute that much. It’s a lie if you do 12/12 when you know you’re eligible for only 11/12th. It’s not about who’s checking. When no one is watching at the checkout line, you still don’t put candy bars into your pocket. Your integrity is worth way more than putting a few hundred dollars extra into your HSA. You still have those few hundred dollars. They just sit outside the HSA versus inside.
Alberto says
LOL! It’s a morality and ethical issue now? Bahahaha…..fundamentally it is a common sense thing. What I been trying to tell you is, it does not matter because it is not significant.
No we won’t still the candy or anything from anyone. Although I would argue that taxation is confiscation.
In his book Seven Habits of effective people, Steven Covey details efficacy, discernment, and effectiveness use of time and money. As I suggested originally, take the max and reduce it by 10% for your contributions and whatever you do , do not feel guilty or make it an ethical issue is you are over $1 or $2 because it does not matter and it will go not only unchecked but unnoticed. It’s not important.
Micaela Ayers says
I retire Feb. 1, so will only add 1/12 of the new (single)contribution limit of $3600 to my HSA this year.
But I qualify for the $1000 ‘catch-up’ and wonder: can I put it all in or do I only get to put in 1/12? Thanks!
Harry Sit says
Only 1/12 of the $1,000.
Alberto & says
Go directly to IRS Publication and do not take anyone’s interpretation……
https://www.irs.gov/publications/p969#en_US_2019_publink1000204049
Michelle says
I feel like it shouldn’t be so complicated but they make it so! I have seen so many different answers but this one makes most sense lol. Thank you.
Zoie says
Hi Harry! I still find this comments thread so helpful! I’m having a brain fart with HSA and FSA in same plan year, with same employer.
1) EE enrolls in HDHP and HSA on January 1. Also elects FSA, and because they have HSA, it is automatically a Limited FSA. EE has mid-year QLE on 7/1 and changes to non-HDHP plan, keeping the (limited) FSA plan. Our setup would automatically term the HSA 6/30 (no longer eligible) and change the Limited FSA to a general purpose FSA eff 7/1. I believe the recharacterization of the FSA from limited to general purpose is ok here? HSA to FSA – no issues, correct – even if didn’t recharacterize the FSA?
2) EE enrolls in non-HDHP and FSA on January 1. EE has mid-year QLE on 7/1 and changes to HDHP and HSA plan, keeping the FSA plan. Our setup would automatically flip the general purpose FSA to a Limited FSA effective 7/1. This is FSA to HSA. I believe the recharacterization of the FSA is ok here, and actually helps so that the HSA eligibility on 7/1 is ok? Since the general purpose would only reimburse “medical” expenses thru 6/30 – there is no overlap? If our setup didn’t allow for the recharacterization, then my understanding is that this EE would NOT be eligible to make HSA contributions. Do I have that right?
3) EE enrolls in non-HDHP and FSA on January 1. EE terminates employment on March 31. FSA coverage would end March 31 (no expenses beyond March 31 can be reimbursed). If EE is rehired on June 1 and elects the HDHP and HSA – the HSA eligibility here would be ok since there is no overlap, correct?
Thanks!
Harry Sit says
All sound good to me. As long as you keep to “HSA + limited FSA” or “no HSA + general FSA” in every month, it’s all good.
Zoie says
Thanks, Harry! I knew I was overthinking it!
Mego says
Hello Harry,
As a new HR person – I have an employee that has an FSA account for January to December 2022 – in August we began offering HDHP insurance and HSA accounts. The employee began contributing to his HSA account too. I now know he cannot do this. He should have completed the year with his FSA account and in January 2023 he could begin contributing to his HSA account and discontinue his FSA contributions.
I believe I am understanding that it would be best for us to “reverse” his contributions to his HSA account. I am not allowing him to contribute to his HSA for December but for the months of August and September I will need to do amendments on our quarterly tax filing and then changes to the 4th quarter filing as well. Does this sound correct? Just trying to wrap my brain around it.
Alberto says
This is not correct. If you have a high premium medical plan insurance anytime during the eligibility period, said so employee can contribute up to the maximum for the said year. It is not up to the employer to manage the HSA contributions. This is the role of the IRS.
Zoie says
In response to Alberto’s response – the employee had an FSA, so unless they are able to re-categorize it as a limited FSA then having the FSA would make them ineligible to contribute to an HSA. As such, I think what needs to happen is the employee removes the excess contributions with the HSA provider.
Joe M says
Thanks for all the great info! I have a high-deductible medical plan and contribute to a family HSA through my work. My wife’s employer offers a limited purpose FSA, but mine does not. If she is on my high-deductible plan, can we still contribute to her LP-FSA? Her employer appears to allow this, but I was not sure if there is any legal requirement preventing LP-FSA contributions if not on that same employer’s medical plan. Thanks!
Zoie says
My employer won’t let you enroll in the LPFSA unless you are enrolled in the HDHP (we make LPFSA eligibility contingent on the HDHP enrollment). I would double check to see if her employer requires the same. If not, and she can enroll in the LPFSA even though she is not in her employer’s HDHP, then I say go for it. I don’t think there’s anything that says you can’t do HDHP with one employer and LPFSA with another.