Recent marriage - HSA/FSA issue

[AniketShah]

I got married recently on the 25th of February, 2017.

My wife has a non-limited FSA with her employer. I have an HSA/HDHP with my employer. I'm looking to move her over to my employer's health plan.

Her employer is willing to retroactively cancel her health insurance and FSA on the 28th of February.

I can enroll her on my company's plan which is effective immediately. She wouldn't have any overlap in FSA/HSA contributions. Would this be fine?

Also, if we went forward with this plan would we be constrained in terms of our HSA contributions?

[spiritrider]

Normally, you can not change FSA elections mid plan year. Luckily, marriage is a change of status event that allows you to do so.

In this case you should be able to make HSA contributions up to the family plan limit for March - December. Normally, that would make your contribution limit 2/12 * individual limit + 10/12 * family limit. However, under the "last month" rule, you can make contributions up to 100% of the plan limit you are eligible for on 12/1.

This means you can make 100% of the contributions up to the full family plan limit, but there will be a "testing period" from 1/1/17 - 12/31/17. If you do not remain an HSA eligible individual for this entire period, your contribution under the last month rule (full contribution - prorated contribution limit) is subject to a 10% penalty.