Having both HSA and FSA

[Guest rbk08]

Hi,

We are switching to an HDHP with HSA with the option of keeping a Limited Purpose FSA for dental/vision/dependent care in January and are also keeping regular FSA's for our employees not participating in our HDHP. I can't seem to find clear answers to some of my questions about keeping both an HSA and FSA. Maybe someone here can help.

Here is the situation:

An employee currently participates in family coverage for herself and her husband through our non-HDHP health plan and has an FSA. Her husband (who works for a different employer) also has an FSA. When she switches over to family coverage through our new HDHP with HSA plan in January, can her husband keep his FSA through his employer or can they only contribute to an HSA and Limited FSA?

How does an FSA for post-deductible expenses only work?

Thanks so much!

[J Simmons]

When she switches over to family coverage through our new HDHP with HSA plan in January, can her husband keep his FSA through his employer or can they only contribute to an HSA and Limited FSA?

Only the HSA and Limited FSA

How does an FSA for post-deductible expenses only work?

Expenses otherwise eligible for FSA reimbursement/payment are not so until the deductible has been met.

[Guest rbk08]

Right. Thanks.

So when the HSA Road Rules say "Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) may make you ineligible for an HSA unless they are: (1) “limited purpose” (limited to dental, vision, child care,

or preventive care) or (2) “post-deductible” (pay for medical expenses after the plan deductible is met). does it mean that our employee's husband can contribute into a post-deductible FSA through his employer and pay for medical expenses after she pays the deductible out of the HSA?

For example, let's say that she has an unusual amount of medical expenses each year and uses the maximum contribution in her HSA ($5950 for family) to pay the deductible and other medical expenses. Can her husband then use $ from a post-deductible FSA to pay for additional medical expenses?

Should we (as an employer) be offering another FSA plan -- a post-deductible FSA -- to our employees as well as a limited purpose FSA?

Or am I confused about the post-deductible plan?

[QDROphile]

The deductible amouts do not have to be paid with HSA dollars, but they cannot be paid with FSA dollars.

Offering An FSA on the bet of big expenses is not likely to help all that many people. Remember that if eligible expenses are not incurred, the amount is lost. Maybe I am just lucky, but I do not know that many people who can reliably predict that they will have such big uncovered expenses.

[J Simmons]

So when the HSA Road Rules say "Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) may make you ineligible for an HSA unless they are: (1) "limited purpose" (limited to dental, vision, child care,

or preventive care) or (2) "post-deductible" (pay for medical expenses after the plan deductible is met). does it mean that our employee's husband can contribute into a post-deductible FSA through his employer and pay for medical expenses after she pays the deductible out of the HSA?

For example, let's say that she has an unusual amount of medical expenses each year and uses the maximum contribution in her HSA ($5950 for family) to pay the deductible and other medical expenses. Can her husband then use $ from a post-deductible FSA to pay for additional medical expenses?

Yes to the first question above, as QDROphile has already answered. Yes to the second question.

Should we (as an employer) be offering another FSA plan -- a post-deductible FSA -- to our employees as well as a limited purpose FSA?

Should you, as an employer? I think QDROphile drew out well the limited utility. Coupling the post-high-deductible with use-it-or-lose it will make such FSA of very limited utility.

Or am I confused about the post-deductible plan?

You're doing great based on the questions you are asking.

[Guest Sieve]

A qualification to JSimmons' and QDROphile's response to your questions . . . I don't think hubbie can just use his FSA to pay for his/wife's medical expenses after the deductible has been met. Hubbie's FSA must be limited, by its terms, to post-deductible expenses (i.e., the FSA must limit reimbursements to post-deductible expenses entirely or just for such expenses for those who participate in an HSA).

Also, there are plenty of situations when FSAs & HSAs can work together to assist with significant medical expenses (although they do, thankfully, impact few people), such as when there are continuing expenses for lengthy treatment regimens (such as dialysis, mental illness, hereditary infantile disease, etc.)

[J Simmons]

A qualification to JSimmons' and QDROphile's response to your questions . . . I don't think hubbie can just use his FSA to pay for his/wife's medical expenses after the deductible has been met. Hubbie's FSA must be limited, by its terms, to post-deductible expenses (i.e., the FSA must limit reimbursements to post-deductible expenses entirely or just for such expenses for those who participate in an HSA).

Hey, Larry, there must be a distinction that I don't get. rbk08 in post #3 asked "Can her husband then use $ from a post-deductible FSA to pay for additional medical expenses?" (emphasis added). What am I missing? What's the difference from a post-deductible FSA and an FSA that by its terms is limited to post-deductible expenses?

[Guest Sieve]

No difference. They're the same. I just got brain freeze.

[J Simmons]

No difference. They're the same. I just got brain freeze.

Slow down when you have ice cream.

[Guest Sieve]

Good advice, indeed. (Vanilla, chocolate marshmallow or rocky road?)

[Guest rbk08]

OK, great posts, thanks everyone.

Correct me if I'm wrong. It seems as though there are 3 types of FSA's out there...

1. Regular FSA for medical & dental/vision/dependent care

2. Limited for dental, vision and dependent care only

3. Limited to post-deductible medical only??

Or are there only two types, meaning the limited FSA (#2 above) would work for the post-deductible medical expenses too?

Sorry. I feel like an idiot here, but I just can't get my mind wrapped around this.

Our employee is in one of those situations where she may actually use the maximum contribution to her HSA and then have additional medical expenses past the HSA family contribution so I want to be sure to tell her the right thing.

Our FSA provider only gave us enrollment forms for a regular FSA and limited purpose FSA for dental/vision/dependent care. It doesn't say anything about post-deductible FSA's on any of the info.

Argh. This is so confusing! And I thought I had it down pat before this post-deductible thing came along.

[J Simmons]

OK, great posts, thanks everyone.

Correct me if I'm wrong. It seems as though there are 3 types of FSA's out there...

1. Regular FSA for medical & dental/vision/dependent care

2. Limited for dental, vision and dependent care only

3. Limited to post-deductible medical only??

Or are there only two types, meaning the limited FSA (#2 above) would work for the post-deductible medical expenses too?

Sorry. I feel like an idiot here, but I just can't get my mind wrapped around this.

Our employee is in one of those situations where she may actually use the maximum contribution to her HSA and then have additional medical expenses past the HSA family contribution so I want to be sure to tell her the right thing.

Our FSA provider only gave us enrollment forms for a regular FSA and limited purpose FSA for dental/vision/dependent care. It doesn't say anything about post-deductible FSA's on any of the info.

Argh. This is so confusing! And I thought I had it down pat before this post-deductible thing came along.

A health FSA could be limited by type (e.g., just to dental/vision) or to just post-high-deductible. Either way, these limits do not disqualify the EE or spouse from high-deductible status for purposes of making HSA contributions.

[Guest rbk08]

Excellent, thank you!

[Guest MrX]

I'm almost in this exact scenario...

Wife has FSA (plan runs June - July)

I carry coverage for family and am think ing of going to HDHP w/HSA.

Can I go to the HDHP, not fund an HSA until later next year, and use the remaining funds in the FSA?

Can I contribute to the HSA and deplete the funds in the FSA. ?

Does funding an HSA make the FSA limeted or post-deductable?

COnfused,

HELP!