Premium conversion and dependent care?

[Guest Princess]

My company used to have a Cafeteria plan that offered Medical Reimbursement FSA, Dependent Care Coverage and Premium Conversion. We are switching to a HDHP with an HSA. We understand we cannot have the FSA any longer (we don't want to bother with a LFSA). Can we keep the other two parts? the Dependent Care Coverage and the Premium Conversion? I am getting conflicting advise on this from advisors. One says we have to switch to a Premium Only Plan and get rid of Dependent Care Coverage. The other says we can keep both.

Thanks in advance!

[MARYMM]

My company used to have a Cafeteria plan that offered Medical Reimbursement FSA, Dependent Care Coverage and Premium Conversion. We are switching to a HDHP with an HSA. We understand we cannot have the FSA any longer (we don't want to bother with a LFSA). Can we keep the other two parts? the Dependent Care Coverage and the Premium Conversion? I am getting conflicting advise on this from advisors. One says we have to switch to a Premium Only Plan and get rid of Dependent Care Coverage. The other says we can keep both.

Thanks in advance!

Yes, you can keep them both. Just be sure to amend your plan documents to eliminate the FSA and add the HSA ( assuming empkoyees will be contributing pre-tax to their HSA Accounts)

[Guest jackmo]

MaryMM is right. Some additional thoughts: I hope you're terminating the FSA at the end of it's plan year and not mid year. Mid-year termination will create "winners" and "losers", i.e., winners will be those who have already exhausted their full annual election and the losers will be those who haven't used any of their election yet.

Also--if terminating at the end of the FSA plan year--does your FSA have a grace period? If so, anyone who has a balance on the last day of the plan year is considered to be a participant in the FSA during the full length of the grace period and therefore cannot make contributions to an HSA during that period (the FSA is first dollar coverage.)

Going beyond your original question: was a dual option arrangement not possible? This would be a low deductible health plan with FSA and a HDHP with HSA--the employee chooses.

[oriecat]

If you say you are eliminating FSAs then you would be getting rid of Dependent Care. Dependent care is a form of FSA. You just need to get rid of the health FSA.