HSAs & FSAs

[Guest AHayhow]

We have people who are currently enrolled in the FSA which is on a calendar year.

We recently added an HDHP w/HSA effective 7/1. If someone is now joining an HDHP and wants to put money into a Health Savings Account -- can they do both? My quandary is that they elected the Flex for the full year and that plan has not been discontinued. However, having a new health plan altogether seems to me to constitute a qualifying event that would allow them to stop flex contributions.

Thanks

[Mary C]

You can have a HDHP but if you are also covered by an FSA, you may not contribute anything to an HSA.

[SLuskin]

You can have a HDHP but if you are also covered by an FSA, you may not contribute anything to an HSA.

Introducing a new health plan is most definitely NOT a change in status. If enrolled in the FSA, the election cannot be changed for the plan year. A person in a general purpose FSA cannot make any contributions into an HSA. No exceptions.

[leevena]

I'd like to make a clarifying statement about Mary C's comment. The law does allow for fsa and hsa to be offered together, but only in 2 scenarios. The first is when you have a limited purpose fsa (dental, vision, and preventive services) and the second being a post deductible. Since you are just now offering an hsa, I would assume that your fsa is not a limited or post, so Mary C's comments are correct. As you go forward, you may want to consider revising your plan.

[LRDG]

I have always understood a significient change in an Employers benefit plans qualifies as a status change provided the employee election is consistant with the Benefit change. This provision expanded the former "family status change' only addressed in Sec. 125, to include for example, employer benefit plan changes, a spouses benefit changes due change in employment, a change in a dependents student status, and similar circumstances beyond the control of the employee.

The provision is addressed in one of 4 temporary Sec. 125 regulations.

[Guest ehs]

Yes, but..... The benefit election changes that may be made are directly related to the event experienced, the consistency of the election change and only a limited list of life events will permit changes to an FSA. A benefit plan improvement or curtailment, does not permit participants to change their FSA.