Can I Contribute to an HSA if My Spouse Has an FSA?
HSAs and FSAs are similar, yet different types of health plans. They are both intended to offer people a tax-advantaged means of paying for health and medical expenses. These plans vary in both function and eligibility. But how exactly do you qualify for an HSA? Can you qualify for both simultaneously? What if your spouse is already enrolled in an employer-sponsored FSA? Would that affect your overall HSA eligibility as well? Read on for more information on the qualification specifics regarding your spouse's FSA plan.
How Do You Qualify for an HSA?
In order to qualify for an HSA, you will need to be enrolled in what is known as a High Deductible Health Plan (HDHP).
An (HDHP) is a type of healthcare coverage that requires participants to spend more on up-front costs before the insurance company begins to contribute to covering expenses. In many cases, people with HDHPs spend less per month on premiums.
Your plan must have a deductible that is $1,400 at minimum for an individual or a $2,800 minimum for a family. The out-of-pocket maximum must also be less than or equal to $7,050 for an individual or $14,100 for a family.
You must not be enrolled in Medicare or any supplemental health insurance. This includes a spouse’s employer-sponsored plan.
You may not be considered a dependent on anybody else's tax return.
You may not be covered under any disqualifying health coverage. This includes your or your spouse's traditional FSA plan.
Can I have an FSA and an HSA?
According to IRS Publication 969, FSAs are considered “other health coverage.” This means that a traditional FSA will not be compatible with an HSA. Meaning, once you have enrolled in an FSA you will likely be unable to enroll in a separate HSA. This means that even if you are not considered a dependent under your spouse's plan, you will still be ineligible.
There is however an exception to this rule. If your employer has offered you a limited-purpose FSA or post-deductible health FSA then you are considered eligible for an HSA alongside said FSA.
A limited-purpose FSA is similar to a typical FSA plan, however, it is used to pay for qualifying dental and vision expenses only, hence the word limited.
A post-deductible FSA allows participants to pay for qualifying medical expenses only once they have reached a minimum deductible amount.
Can I have an HSA if My Spouse has an FSA?
If your spouse is currently enrolled in a general-purpose FSA plan, then you are not considered eligible for an HSA alongside it. The reasoning behind this is that both the FSA and the HSA will reimburse expenses prior to the deductible being met. Expenses would be covered under both plans, and as such disqualify one another. This is true even if the employee does not qualify as a dependent on their spouse's plan.
However, If the spouse is enrolled in a post-deductible plan or a limited-purpose plan, then as mentioned previously, they will still be considered eligible for an HSA. This means even if you are not considered a dependent, you will still be eligible for an HSA plan alongside your spouse's FSA.
What are the Benefits of HSAs or FSAs?
For HSA account holders, a little bit of understanding goes a long way. Key benefits for health savings accounts include:
Triple-tax savings on deposited funds
Account funds are automatically rolled over each year
Money can be used indefinitely, so long as the purchase is a qualified medical expense
People can invest their HSA funds to maximize long-term benefits
On the other hand, individuals with FSAs benefit from the following:
No eligibility requirements
Reduced out-of-pocket costs for qualified expenses
Significant tax savings
Linked to a debit card for easy use
Immediate access to funds
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