If I have an HSA, can I have a Medical FSA or HRA?
An HSA cannot be combined with a General Medical FSA or HRA. The IRS permits an individual to have a Limited Medical FSA or Limited HRA which allows you to save additional tax-free dollars for vision and dental expenses.
If I have a Dependent Care FSA, am I still HSA eligible?
A Dependent Care FSA does not affect your eligibility for an HSA. You can have both accounts without creating any conflict of benefits.
I am moving from a Medical FSA this plan year to an HSA next plan year. Are there any issues or concerns that I should be aware of?
When transitioning from a Medical FSA to an HSA, you need to make sure you understand when you become HSA eligible. Here are a few simple steps to use to determine when you become HSA eligible.
- Determine when your Medical FSA coverage ends. If your Medical FSA coverage ends before your HSA-compatible health plan coverage begins, you are HSA eligible on the first date of your health insurance plan coverage. If Medical FSA coverage continues after your HSA-compatible health plan coverage begins, you need to further evaluate when you become eligible. (Proceed to 2.)
- Determine if you have overlapping coverage. While enrollment in your health plan and your Medical FSA typically occurs at the same time, your employer may have overlapping plan years where the health insurance plan enrollment begins before the current Medical FSA plan year ends. If you have overlapping plan years, you will not be eligible until the first of the month following the end of the Medical FSA plan year. An Extended Grace Period (EGP) is generally considered part of the plan year for purposes of HSA eligibility and you would not be eligible to contribute to the HSA until the first of the month following the end of the EGP.
There are two exceptions that exist where you become HSA eligible as of the first day of HSA-compatible plan coverage with overlapping coverage:
A. Extended Grace Period (EGP) offered as a Limited Medical FSA.
- If your employer offers EGP as a Limited Medical FSA to all entitled participants, you are HSA eligible on the first date of your HSA-compatible health plan coverage.
B. Medical FSA balance at end of plan year.
- If you have a $0 balance in your Medical FSA at the end of your plan year, (e.g. your plan year is from January 1 - December 31, and your account balance is $0 on December 31), you are HSA eligible on the first date of your HSA-compatible health plan coverage.
- If you have a balance in your Medical FSA greater than $0 at the end of your plan year and your employer offers EGP, you will not be HSA eligible until the first of the month following the end of the EGP, even if your account balance reaches $0 at an earlier point during the grace period.
- If your employer offers a Medical FSA Rollover, as indicated in your plan documentation, and you have a balance in your General Medical FSA at the end of the current plan year and you want to become HSA eligible at the beginning of the next plan year:
- You can waive your right to roll any unused General Medical FSA funds to the new plan year.
- You can elect to participate in a Limited Medical FSA (which reimburses only vision and/or dental expenses) for the new plan year and any funds that are eligible to roll from the General Medical FSA can be added to the Limited Medical FSA.