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  1. #1
    Join Date
    Jan 2006
    Location
    Kentucky
    Posts
    70

    Default Can You Hold Both a FSA and a HSA in the Same Year

    I'll try to be concise, both FSA and HSA administrators I've spoken to say 'Ask a tax professional', and I think I just have a general question.

    ? Can I start an HSA for 2012 and fund it for 2 or 3 months, then join an unrestricted FSA and suspend contributions to the HSA for the remainder of the year? I know you can't USE them both at the same time, but my question is the legality of having BOTH simultaneously. Here's my issues:

    - Am Covered by a high deductible health plan (retiree from previous company)
    - Currently have an employer-provided unrestricted FSA, will max out my expenses for 2011 so no carry over.
    - Current employer has been bought by another company, but the purchase transaction won't complete until Feb/Mar 2012. We just had open enrollment for current emplyr.
    - Current emplyr will not offer FSA for 2012.
    - New emplyr WILL offer FSA, but I can't join until after the purchase deal is complete. I understand that qualified expenses between 1/1/12 and enrollment to FSA can't be reimbursed.
    - I will have significant prescription and/or medical expenses in Jan/Feb 2012 before I can enroll in new emplyr FSA.

    My thought was to start an HSA for 2012 now, fund it for $1,000 so I can be reimbursed for those early expenses, then join the FSA in March/April and suspend contributions to the HSA until some future time. What's the answer to this please?

    Thanks in Advance!

  2. #2
    Join Date
    Sep 2010
    Posts
    10,090

    Default Re: Fsa / Hsa

    Actually, you can have a limited FSA in play at the same time as an HSA. See this: http://www.irs.gov/irb/2005-49_IRB/ar08.html
    You need to see if (and if they are using HDHP in the new job I would suspect they are) using the limited FSA.

    Anyhow, it's not the HSA that makes you ineligible for the FSA but the other way around. So yes, you can have an HSA and accrue into it and take from it for qualified expenses. Once you've got the (non-compatible FSA) you are no longer elgible for the HSA even with the HDHP.

  3. #3
    Join Date
    Jan 2006
    Location
    Kentucky
    Posts
    70

    Default Re: Fsa / Hsa

    Thanks,

    So when you say "no longer elgible for the HSA even with the HDHP" does that mean I have to close the HSA? I can't keep it and just not contribute to it? My HDHP is provided from another provider - neither current or future employer. I usually don't buy health coverage from employer because I already have the HDHP.

  4. #4
    Join Date
    Sep 2010
    Posts
    10,090

    Default Re: Fsa / Hsa

    If you are covered by an (unrestricted) FSA you are ineligible for an HSA. Any non-HDHP, including a regular FSA, makes you ineligible for the HSA contributions.

  5. #5
    Join Date
    Dec 2011
    Posts
    1

    Default Re: Can You Hold Both a FSA and a HSA in the Same Year

    Yes, you can start an HSA for 2012 and fund it for 2 or 3 months, then join an unrestricted FSA and suspend contributions to the HSA for the remainder of the year. As others have said, having an unrestricted FSA causes problems with eligibility to contribute to an HSA, but an HSA does not cause eligibility problems with an FSA.

    There are two types of health FSAs that are compatible with an HSA so you could have both at the same time: (1) a "limited purpose" health FSA that only reimburses dental, vision, and/or preventive care expenses; (2) a "post-deductible" health FSA that reimburses expenses after you've met at least a minimum amount towards your high deductible (your employer would set the minimum amount); or (3) a combination of these two FSA plans.

    You need to familiarize yourself with the contribution limits for an HSA before you make a contribution. For example, if you are only eligible for the HSA for 3 months (assuming your unrestricted health FSA starts April 1), then you are only eligible to contribute 3/12 of the maximum HSA amount of $3,100 for a single person for 2012. This is less than $1,000.

    How much will your new employer allow you to put in your unrestricted FSA for the final 9 months of the year? If more than $3,100, then it might make sense to do what you are suggesting. However, since the money is use-or-lose, you have to be careful about putting too much in unless you know you are going to spend it all. This is where sticking with an HSA for the entire year might make more sense since any unspent funds automatically roll over to the next year and you can add more to it then.

    Feel free to contact me with further questions.

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