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HSA/HDHP and relocation


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An employee is enrolled in a regional HMO with a standard FSA. He is relocating and needs to select another health plan. We offer a national HDHP/HSA (in order to enroll in the HDHP you must qualify under the HSA rules) and he wants to enroll (note there is another health plan choice available to him). Is he prevented from enrolling in the HDHP/HSA since he has an FSA or can I let him enroll in this plan due to his relocation and the fact that he can change to a Limited FSA?

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Guest SHaddon
An employee is enrolled in a regional HMO with a standard FSA. He is relocating and needs to select another health plan. We offer a national HDHP/HSA (in order to enroll in the HDHP you must qualify under the HSA rules) and he wants to enroll (note there is another health plan choice available to him). Is he prevented from enrolling in the HDHP/HSA since he has an FSA or can I let him enroll in this plan due to his relocation and the fact that he can change to a Limited FSA?

If he were to enroll in the HDHP (I'm assuming the stipulation that he must qualify under the HSA rules is employer imposed) he would not be able to contribute to an HSA as long as he was eligible under the full FSA. The relocation isn't a qualifying event to change his FSA election so that will remain in effect until the end of the plan year.

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Thanks - I understand your comments and recognize that relocation is not a QLE for FSA. What would happen in this scenario if the only other plan we offered was an HDHP and in order to enroll, the employee must qualify for an HSA (yes that is employer imposed)?

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  • 2 weeks later...
An employee is enrolled in a regional HMO with a standard FSA. He is relocating and needs to select another health plan. We offer a national HDHP/HSA (in order to enroll in the HDHP you must qualify under the HSA rules) and he wants to enroll (note there is another health plan choice available to him). Is he prevented from enrolling in the HDHP/HSA since he has an FSA or can I let him enroll in this plan due to his relocation and the fact that he can change to a Limited FSA?

If he were to enroll in the HDHP (I'm assuming the stipulation that he must qualify under the HSA rules is employer imposed) he would not be able to contribute to an HSA as long as he was eligible under the full FSA. The relocation isn't a qualifying event to change his FSA election so that will remain in effect until the end of the plan year.

Are you sure that the relocation (change in work site) is not a qualifying event for a change to the FSA ?

(iii) Employment status. Any of the following events that change the employment status of the employee,

the employee’s spouse, or the employee’s dependent: a termination or commencement of employment; a strike or

lockout; a commencement of or return from an unpaid leave of absence; and a change in worksite. In addition, if

the eligibility conditions of the cafeteria plan or other employee benefit plan of the employer of the employee,

spouse, or dependent depend on the employment status of that individual and there is a change in that

individual’s employment status with the consequence that the individual becomes (or ceases to be) eligible under

the plan, then that change constitutes a change in employment under this paragraph © (e.g., if a plan only

applies to salaried employees and an employee switches from salaried to hourly-paid with the consequence that

the employee ceases to be eligible for the plan, then that change constitutes a change in employment status under

this paragraph ©(2)(iii)).

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