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HSA to FSA mid-year with one-month overlap?

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#1 kbognich


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Posted 11 June 2010 - 08:37 PM

On 6/1, the company I work for was acquired, resulting in new benefits becoming available to our family. The effective date of any elections under the new benefit plan is 6/1.

Our family is currently covered through a HDHP/HSA offered by my husband's employer, but we're opting to change to the family coverage offered by my company. The new coverage is a PPO plan, offered with an optional full (NOT limited purpose) health FSA. I understand that discontinuing participation in the HDHP will make us ineligible to continue contributing to the HSA.

My husband's employer states that any family status changes are to take effect 30 days after the date of the change, so our coverage under the HDHP/HSA will continue until 7/1. We will be thus double-covered for the month of June.

Specifically because of this overlap month, I *think* we are ineligible to participate in the new health FSA, because it looks to me as if simultaneous participation in an HSA and a non-limited-purpose health FSA is prohibited by IRS code. Am I correct?

We've talked to both employers, and no one is willing (or able, very possibly) to budge on coverage end/begin dates.

Are we best off just making a lump-sum contribution to the HSA before 7/1 to max out our $3075 adjusted limit for the year and foregoing the health FSA until next open enrollment (which is the same as the calendar year)?