FSA and HSA

[boiler717]

We switched to an HDHP with HSA this year (through my husbands insurance). Somehow, my healthcare FSA also re-enrolled even though I’m sure I elected $0 for contributions. I am trying to work through our options and wanted to see if anyone had ideas. In the meantime, we’ve paused HSA contributions.
1. Try to get HR to honor my $0 election (I don’t hold out much hope for this as I can’t find my printed summary and they sent an email after I completed enrollment that the email summaries are wrong. My email summary said FSA dependent care — waived, medical — waived.
2. Try to get HR to honor the new IRS rules that allow a change in FSA elections (also don’t hold much hope for this and need to make sure it’s valid for 2022).
3. See if our FSA administrator can move me to a limited FSA instead of full and use for vision and dental (which we are overdue for).
4. Try to use up our FSA funds ASAP so we can start HSA contributions — per my reading it seems like this is an option. The month after we exhaust FSA funds we can start HSA contributions.
Anything else we can do? Any experience of suggestions?

[steamboat185]

I have an FSA through my work and we are on a HDHP through DH’s work. We use mine as a limited purpose FSA- which has actually gotten way easier this year as over the counter medicine, masks, sunscreen, Covid tests, vision and dental all count. In our experience you can fund the HDHP as long as you use the FSA as a limited purpose.

[dragon's breath]

You'll need to look more into your #4. When I was doing research on FSA/HSA, I found that you could not have any FSA money in a general FSA account in the same calendar year you contribute to an HSA. Limited FSA is ok though.

[MrsE]

I would either ask them to fix it and refund you the money (although beware this could cause an extra tax form next year to show proof) or ask them to switch it to the limited FSA for dental and vision only.

[boiler717]

Our FSA is not something that has ever said limited purpose. Am I okay using it as limited purpose and only claiming things for vision / dental?

[awkwardpenguin]

Jan 3, 2022 21:25:55 GMT -5 steamboat185 said:

I have an FSA through my work and we are on a HDHP through DH’s work. We use mine as a limited purpose FSA- which has actually gotten way easier this year as over the counter medicine, masks, sunscreen, Covid tests, vision and dental all count. In our experience you can fund the HDHP as long as you use the FSA as a limited purpose.

This is not accurate.  An FSA without actual restrictions (not self-imposed restrictions) on what you can spend it on counts as "other coverage" for HSA purposes and disqualifies you from being eligible for an HSA.

[awkwardpenguin]

boiler717,if your summary says you waived both, I'd get them to correct it.

Here's an informative FAQ about the interaction of FSAs and HSAs.

www.benstrat.com/downloads/HSA-GPS_HSAs-and-Interaction-with-Health-FSAs.pdf

[steamboat185]

Jan 6, 2022 15:18:57 GMT -5 awkwardpenguin said:

Jan 3, 2022 21:25:55 GMT -5 steamboat185 said:

I have an FSA through my work and we are on a HDHP through DH’s work. We use mine as a limited purpose FSA- which has actually gotten way easier this year as over the counter medicine, masks, sunscreen, Covid tests, vision and dental all count. In our experience you can fund the HDHP as long as you use the FSA as a limited purpose.

This is not accurate.  An FSA without actual restrictions (not self-imposed restrictions) on what you can spend it on counts as "other coverage" for HSA purposes and disqualifies you from being eligible for an HSA.

I work for one of the top 5 healthcare companies. They say it’s set up correctly when I’ve called, but it doesn’t say limited purpose on the statement. It will reject claims that don’t meet the requirements. That’s what I meant by treating it as limited purpose.

[awkwardpenguin]

Jan 6, 2022 15:29:26 GMT -5 steamboat185 said:

Jan 6, 2022 15:18:57 GMT -5 awkwardpenguin said:

This is not accurate.  An FSA without actual restrictions (not self-imposed restrictions) on what you can spend it on counts as "other coverage" for HSA purposes and disqualifies you from being eligible for an HSA.

I work for one of the top 5 healthcare companies. They say it’s set up correctly when I’ve called, but it doesn’t say limited purpose on the statement. It will reject claims that don’t meet the requirements. That’s what I meant by treating it as limited purpose.

Yeah, an actual limited purpose FSA does not disqualify you.  But you cannot have a general purpose FSA at all, even if you only spent it on limited purpose eligible expenses.

[boiler717]

Update, my work was able to figure it out and it was totally fine. Downside, my husband did realize he was taking out $400/m for a childcare FSA ALL YEAR LONG last year and now we have to figure that out now. So check your pay stubs! At least I discovered mine at the beginning of the year and not at the end like him.