Eligible for FSA if covered by spouse's health insurance

[katsiki]

My wife is covered under my employer's insurance policy.  Her company has a lot of benefits that my company does not offer.  One is an FSA.  Can she participate in the FSA if not covered by her employer's health insurance plan?  I googled around but could not find anything definitive.

thanks for your help!

[cawiau]

No she cannot, to participate in both the FSA and/or HSA the person also  have to be covered by their employer's health insurance plan.

- Just went through open enrollment and switch from my insurance to my wife and also wanted to know if I could keep on maxing the HSA.

But she can always ask her benefits department to make sure.


Sent from my iPhone using Tapatalk

[MDM]

... to participate in both the FSA and/or HSA the person also  have to be covered by their employer's health insurance plan.

That statement is not necessarily true.  It depends on the employer.
See https://www.irs.gov/publications/p969/ar02.html#en_US_2014_publink1000204174: "Employers have complete flexibility to offer various combinations of benefits in designing their plan."

See also https://www.bogleheads.org/forum/viewtopic.php?f=2&t=177862 for similar discussion.

[cawiau]

And that is why I said she needed to follow up with "Her" benefits department to make sure.

I know and my case, my benefits department said no. ;)


Sent from my iPhone using Tapatalk

[katsiki]

Thanks everyone for the info and advice.  We'll try to find out from her benefits dept (not always easy unfortunately!)

[DaMa]

I've done this before.  My family was covered by my health benefits, but we used my husband's FSA because it had a debit card.  This was 2009 or early, though.

[katsiki]

In case this helps anyone in the future, I wanted to follow-up.  We were able to enroll in the FSA without health insurance from the employer.  I followed some advice in one of the linked posts and just tried it.  ADP's system allowed it.

[I'm a red panda]

The only reason this would be an issue is if the insurance you do have has an HSA.  You cannot use an FSA if you have access to an HSA.  (Hence I cannot use my FSA at all, even though -I- do not have an HSA, because my husband has an HSA; and MY FSA would be considered coverage for HIM. It's annoying.)

The HR department won't know about your outside coverage and will let you enroll, but it is still not allowed.

[charis]

We were able to sign my husband up for an FSA through his work even though he does not have a health plan through his insurer.

The only reason this would be an issue is if the insurance you do have has an HSA.  You cannot use an FSA if you have access to an HSA.  (Hence I cannot use my FSA at all, even though -I- do not have an HSA, because my husband has an HSA; and MY FSA would be considered coverage for HIM. It's annoying.)

The HR department won't know about your outside coverage and will let you enroll, but it is still not allowed.

I don't believe that this is true.  We set up an HSA in 2014 and it still exists.  However, we won't be making contributions to it when we are using my husband's FSA this upcoming year.  If you weren't allowed to use an FSA when you had access to an HSA, just setting up an HSA once would preclude you from ever getting a medical FSA ever, unless the HSA was closed, right?

[seattlecyclone]

If any member of your tax family has money in an FSA that could be spent on your pre-deductible medical expenses, you are not eligible to contribute to an HSA. If you already have an HSA, you can still spend the money out of there whether you're allowed to contribute more to it this year or not.

[charis]

If any member of your tax family has money in an FSA that could be spent on your pre-deductible medical expenses, you are not eligible to contribute to an HSA. If you already have an HSA, you can still spend the money out of there whether you're allowed to contribute more to it this year or not.

The first sentence almost implies that if you use up all your FSA funds, you could then start contributing to your HSA again.  Just to clarify, though, one would have to wait until the FSA coverage period ends (end of plan year or separates from employer) to contribute to an existing HSA, correct?

[MDM]

The first sentence almost implies that if you use up all your FSA funds, you could then start contributing to your HSA again.  Just to clarify, though, one would have to wait until the FSA coverage period ends (end of plan year or separates from employer) to contribute to an existing HSA, correct?

Correct. 

Also be careful about FSA carryover amounts: if you leave anything in your FSA and have a plan that allows you to carry over the unused balance for the next year you are ineligible for an HSA for that whole next year.

[sisto]

You can have both an HSA and and FSA, but the FSA is quite limited on what it can be used for if you have and HSA. You can't use it for typical medical expenses, but you can use it for dental and for glasses or contacts. So there is some benefit to having it and deferring some income, you can also rollover $500 at the end of the year.

[MDM]

...the FSA is quite limited on what it can be used for....

Note that the limitations have to be built into the FSA itself - you can't merely promise to restrict your usage in order to qualify for an HSA.

[seattlecyclone]

You can have both an HSA and and FSA, but the FSA is quite limited on what it can be used for if you have and HSA. You can't use it for typical medical expenses, but you can use it for dental and for glasses or contacts. So there is some benefit to having it and deferring some income, you can also rollover $500 at the end of the year.

There's such a thing as a "limited purpose FSA" that only covers things like glasses, dental work, and post-deductible medical expenses so that you don't lose your HSA contribution eligibility. These are commonly offered alongside HDHP insurance.

In the case of a married couple where both spouses work, one has an HDHP, and the other doesn't, the FSA offered to the non-HDHP spouse is unlikely to be one of these limited-purpose FSAs. It is also likely to allow family members to claim expenses against the account, even if they aren't on that insurance plan. This combination is enough to disqualify the HDHP spouse from making HSA contributions. If you want the HDHP spouse to keep being able to make HSA contributions, the non-HDHP spouse needs to decline FSA contributions that year.

[charis]

...the FSA is quite limited on what it can be used for....

Note that the limitations have to be built into the FSA itself - you can't merely promise to restrict your usage in order to qualify for an HSA.

There's such a thing as a "limited purpose FSA" that only covers things like glasses, dental work, and post-deductible medical expenses so that you don't lose your HSA contribution eligibility. These are commonly offered alongside HDHP insurance.

Yes, it does not fall on how you use it, it comes down whether this specific type of FSA, the "limited use FSA," is being offered to begin with.  I called my benefits office to ask whether they offered a limited FSA, but they don't, we just have a regular medical FSA.

[sisto]

Thanks for the clarification MDM and Seatlecyclone. You are correct, I was thinking of a limited use FSA. That makes sense that you could not combine the plans.