HSA Self Only - Spouse Is FSA Elegible

[amsgh_bene]

I have an HSA that comes with my Employer provided HDHP. This year i elected for self only coverage in my HDHP. The HSA max is 4300 in 2025. My spouse is electing self only coverage through her non-HDHP provider. If i understand correctly my spouse (we just got married in Sep 2024) who is eligible for FEDS-FSA through her federal government job enrolls into FSA this will make my HSA contributions disqualified/disallowed?

1. If that is the case can i contribute up to the HSA max of 8550 instead? I've already completed my enrollment with self-only coverage and she is not associated to any of my insurance(s).
2. If #1 is not possible. Can she enroll in a Limited Expense Health Care FSA?
3. Regardless of the above answers am i allowed to use HSA funds for my personal expenses with contributions I've made before getting married?

If Brian answers this i give an advanced thank you! The info he provides is immense in this community.

[Brian Gilmore]

Hi there, congrats on the marriage.  Yes, you are correct that both you and your spouse would be blocked from HSA eligibility if your spouse enrolls in a general purpose FSA through her workplace.  This is because the health FSA would reimburse both your spouse's and your medical expenses pre-deductible.

However, if your spouse is merely eligible for a general purpose health FSA, but doesn't actually enroll, that will not affect the HSA eligibility of either you or your spouse.

1. If that is the case can i contribute up to the HSA max of 8550 instead? I've already completed my enrollment with self-only coverage and she is not associated to any of my insurance(s).  If your spouse enrolls in the general purpose health FSA, neither of you can contribute to a HSA because you both would have disqualifying coverage.
2. If #1 is not possible. Can she enroll in a Limited Expense Health Care FSA?  Definitely.  Limited purpose FSAs are not disqualifying coverage because they reimburse only dental/vision/preventive expenses (i.e., they do not reimburse pre-deductible, non-preventive medical expenses).
3. Regardless of the above answers am i allowed to use HSA funds for my personal expenses with contributions I've made before getting married?  Definitely.  HSA eligibility is relevant only to the ability to make and receive HSA contributions.  Tax-free distributions for medical expenses are available for the HSA holder, spouse, and qualifying children regardless of whether the HSA holder or those dependents are currently HSA-eligible.

[Slider]

What if the spouse's general purpose FSA could be set up so that only the spouse's expenses could be reimbursed? Would that still have an effect on the OP's HSA eligibility? 

[Brian Gilmore]

If the employee's general purpose health FSA reimbursed only the employee's expenses, it would not be disqualifying coverage for the spouse.  It would only be disqualifying coverage for the employee.  But I don't think I've actually seen a real-world health FSA with that plan design. 

In this case, we're talking about the FedFlex Plan, which (like just about all other health FSAs) does reimburse spouse's expenses: https://www.opm.gov/healthcare-insurance/flexible-spending-accounts/reference-materials/fedflex.pdf

 

[amsgh_bene]

On 11/18/2024 at 5:59 PM, Brian Gilmore said:

Hi there, congrats on the marriage.  Yes, you are correct that both you and your spouse would be blocked from HSA eligibility if your spouse enrolls in a general purpose FSA through her workplace.  This is because the health FSA would reimburse both your spouse's and your medical expenses pre-deductible.

However, if your spouse is merely eligible for a general purpose health FSA, but doesn't actually enroll, that will not affect the HSA eligibility of either you or your spouse.

1. If that is the case can i contribute up to the HSA max of 8550 instead? I've already completed my enrollment with self-only coverage and she is not associated to any of my insurance(s).  If your spouse enrolls in the general purpose health FSA, neither of you can contribute to a HSA because you both would have disqualifying coverage.
2. If #1 is not possible. Can she enroll in a Limited Expense Health Care FSA?  Definitely.  Limited purpose FSAs are not disqualifying coverage because they reimburse only dental/vision/preventive expenses (i.e., they do not reimburse pre-deductible, non-preventive medical expenses).
3. Regardless of the above answers am i allowed to use HSA funds for my personal expenses with contributions I've made before getting married?  Definitely.  HSA eligibility is relevant only to the ability to make and receive HSA contributions.  Tax-free distributions for medical expenses are available for the HSA holder, spouse, and qualifying children regardless of whether the HSA holder or those dependents are currently HSA-eligible.

Thanks! If my spouse does not enroll or contribute to her FSA(s) can i contribute up to the HSA 8550 MAX even though i have self-only coverage on my HDHP? I'm already past enrollment period now...

[Brian Gilmore]

No.  The HSA rules define family HDHP coverage as any coverage other than self-only coverage.  This means that employees who are HSA-eligible and cover at least one other individual under the HDHP (e.g., employee + spouse, employee + domestic partner, employee + child(ren), employee + family) can contribute up to the family HSA limit.

Where an employee is enrolled in individual-only HDHP coverage and HSA-eligible for the entire calendar year, the contribution limit is the statutory limit for individual coverage.

Here's the simplest explanation:

IRS Publication 969:

https://www.irs.gov/pub/irs-pdf/p969.pdf

Self-only HDHP coverage is HDHP coverage for only an eligible individual. Family HDHP coverage is HDHP coverage for an eligible individual and at least one other individual (whether or not that individual is an eligible individual).

Example. You, an eligible individual, and your dependent child are covered under an “employee plus one” HDHP offered by your employer. This is family HDHP coverage.

 

• More details: https://www.newfront.com/blog/hsas-and-family-members

Slide summary:

2024 Newfront Go All the Way with HSA Guide