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compatibility of HSA and FSA plans


Guest shcinstl
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Guest shcinstl

My husband’s employer has an FSA plan with a plan year from 7/1/2009 to 6/30/2010. Last July he requested $1,200 be deducted from his pay for FSA. To date we've only used $400 of the $1,200. I do not believe his FSA plan is defined as limited or special purpose.

Just recently my company converted from a PPO plan to an HSA plan for a 1/1/2010 to 12/31/2010 plan year, so it overlaps my husband's FSA plan. In this situation, what do we do? Can we continue to use the FSA funds even though they are not defined as limited/special purpose? Am I free to make contributions to my new HSA plan? Would we be okay if we just make sure the total of pre-tax dollars in the 2 plans don’t exceed the $6,150 HSA limit for 2010? Or are limits different for HSA's and FSA's.

When asked this question, the medical insurance broker for our company suggested:

"You cannot contribute to both FSA and H.S.A accounts. Because you and your spouse elected the FSA and it is in the middle of the plan year you have to use that money first. Once that plan ends then you can start putting funds into your H.S.A account. Example: medical and pharmacy bills will need to be paid with the money from your FSA. After July 1st you can start using your H.S.A."

If that's correct, what happens if I run out of funds in the FSA account prior to July 1. Can I start contributing to my HSA before July 1?

If I can’t contribute to the HSA until July 1, how does that affect the maximum limit I can contribute to the HSA for the year? The annual cap for 2010 is $16,500. Does that mean if I can’t start until July 1 I can only contribute 50% of the limit, or $8,250? Or can I still contribute $16,500 for the calendar year, but it would just all be in the second half of the year?

Any help you can offer would be greatly appreciated!!

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My humble suggestion to you is that you need to do some extensive research so that you have an understanding of the issues.

While yoour employer mmight have converted from a PPO to some other form of insuraance coverage, it was not to an HSA. An HSA is a savings plan which needs to related to a High Deductible Health Plan (HDHP). The PPO most likely was replaced by an HDHP not by an HSA.

In your post you stated TWO (2) different limits for the HSA contribution, which suggests your need for research..

Who is covered How, under which employer's health insurance and FSA etc etc?

I have issues with other items in your post, but these should become clear to you after you do the research.. Just Google various terms involving "HSA" such as "HSA contribution limits 2010" .

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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My humble suggestion to you is that you need to do some extensive research so that you have an understanding of the issues.

While yoour employer mmight have converted from a PPO to some other form of insuraance coverage, it was not to an HSA. An HSA is a savings plan which needs to related to a High Deductible Health Plan (HDHP). The PPO most likely was replaced by an HDHP not by an HSA.

In your post you stated TWO (2) different limits for the HSA contribution, which suggests your need for research..

Who is covered How, under which employer's health insurance and FSA etc etc?

I have issues with other items in your post, but these should become clear to you after you do the research.. Just Google various terms involving "HSA" such as "HSA contribution limits 2010" .

You never cease to amaze me. Over the years I have seen you continue to berate and belittle people on this board, even as others have criticized you for your behavior.

It is clear this woman does not have a background in benefits, which is why she is coming to this site. All she is asking for is a little help. Instead of helping you insult her and tell her to use Google.

How in the world would you know that the employer did not switch from PPO to a Health Savings Account? Are you now a mind reader? Can you really be this arrogant and condescending?

So, my humble suggestion to you is that before you criticize someone and tell them they need to have an understanding of the issues, you may want to purchase a 3rd grade spelling and grammar book so that you can have an understanding of spelling and punctuation rules.

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Guest shcinstl

Please allow me to start over... since, as someone surmised, I do not have a background in benefits, and as a result made a number of mistakes in my first post - along with a careless typo.

As an aside, I did do several hours of research on the internet on HSA's before posting my request, but couldn't find an answer to my specific questions. (In fact, it was by Googling HSA's that I found this sight in the first place.)

Mistake #1: Referring to my company's medical plan as an HSA plan. I do understand that HSA is an acronym for Health Savings Account and therefore calling a health plan an HSA plan doesn't make logical sense. However, given the name of the plan - offered by Anthem Blue Cross/Blue Shield - is "Lumenos Health Savings Account Plan - Option 6 (Blue Access Choice)", I mistakenly thought it was reasonable to call it an HSA plan. It does have a relatively high deductible, so I guess it's really a high deductible plan.

Mistake #2: Noting two different contribution limits. I had googled "HSA contribution limits for 2010" and found the answer to be $6,150 for a family. I made a typo the second time I cited the contribution limit in my first post (i.e. transposed two of the numbers) and inadvertently typed $16,500 instead of $6,150. Not catching my mistake, I then halved the wrong amount to suggest that half a year's contribution would be $8,250.

Now that I've corrected the above, let me get back to details about the issue. Please accept my apologies in advance if I don't use the correct terminology everywhere - I'm doing the best I can.

FSA: My husband's company offers an FSA, with a plan year from 7/1 to 6/30. For the most recent plan year, 7/1/2009 to 6/30/2010 he signed up for an FSA of $1,200.

HSA: My company now offers a health plan that allows me to set up an HSA and contribute pre-tax dollars, deducted from my paychecks to pay for qualified medical expenses. The plan year is 1/1/2010 to 12/31/2010. My entire family, including my husband, is covered under this medical plan.

While doing research on the internet I found this quote "You are eligible to have both an HSA and an FSA only if the FSA has been defined as either limited/special purpose (e.g. limited for dental and/or vision services or dependent care only) or the FSA that has been designed only allows payment for the coinsurance under the Traditional Health Coverage component of the plan, after the deductible was met."

To the best of my knowledge, the FSA plan my husband participates in through his companyis not defined as limited or special purpose.

So I asked my company's medical insurance broker, if I would be able to contribute to my HSA, given my husband's FSA and their response was "You cannot contribute to both FSA and H.S.A accounts. Because you and your spouse elected the FSA and it is in the middle of the plan year you have to use that money first. Once that plan ends then you can start putting funds into your H.S.A account. Example: medical and pharmacy bills will need to be paid with the money from your FSA. After July 1st you can start using your H.S.A."

My interpretation of their response was that I couldn't make any pre-tax contributions into my HSA until July 1st. I anticipate this will be a meaningful disadvantage for my family, since we are likely to have qualified medical expenses significantly above the $1,200 put into the HSA, that we would now have to pay for with after-tax money instead of pre-tax money. Hence, my interest in getting a second opinion from experts in benefits via my original post.

I'm intrigued with the suggestion of seeing if I can roll over the FSA money into the HSA. I'll look into this.

I'm also still interested in any other suggestions.

Thank you for any help you can offer.

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You can contribute to both an HSA and an FSA iif the FSA is limited or special purpose. There are very specific rules which have been explained and exampled in various IRS releases/publications.

However, it might be bbbest to start with BC and Lumenos for the explanations of exactly what they are offering. Have you been through this Q&A ?

http://www.anthem.com/wps/portal/cdhp?cont...label=Questions ^ Answers

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Guest shcinstl
You can contribute to both an HSA and an FSA iif the FSA is limited or special purpose. There are very specific rules which have been explained and exampled in various IRS releases/publications.

However, it might be bbbest to start with BC and Lumenos for the explanations of exactly what they are offering. Have you been through this Q&A ?

http://www.anthem.com/wps/portal/cdhp?cont...label=Questions ^ Answers

As I mentioned I don't believe the FSA is limited or special purpose.

I did find and read the Q&A from anthem.com. In fact, it's where I found the comment about not having both an FSA and HSA - noted in my posts - that was the genesis for my post.

I also contacted BC and got and reviewed the Summary of Benefits for the Lumenos HSA Plan. I believe I understand what they are trying to do with it, but it didn't answer my questions about one spouse having an HSA and one having an FSA at the same time.

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