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Adding HSA to plan with existing Medical FSA.


Guest taylorjeff

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Guest taylorjeff

I have a group where we are planning to offer a high deductible health plan in addition to their regular PPO plan. We plan to offer the HDHP effective Jan. 1. We want to offer HSAs at that time also. The group currently has a section 125 plan with medical and dependent care FSAs. The 125 plan is set up with a Oct. 1st start date (concurrent with the group's medical anniversary date).

I know we have to amend the 125 plan to allow employer contributions via the 125 plan to the HSA accounts. I also understand the employees cannot have both a FSA and HSA. Am I right in assuming that the creation of the new HDHP and HSAs will be a qualifying event allowing those employees who were enrolled in the FSAs to drop them effective Jan. 1? Will only expenses from 10/1 to 12/31 be eligible for reimbursement under the FSA? If these expenses exceed their 10/1 to 12/31 election, could the employer be on the hook for an employee's entire annual election due to the uniform benefit rule? Ie., employee had $100/month election, will have paid $300 from 10/1 to 12/31, but has between $301 and $1200 in expenses.

Thanks

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