This is one of the links that popped up. It looks like enrollment is a no go (IF 1) general and 2) applies to all family members), but I wanted confirmation that we're ok if we simply don't enroll in my plan. They are afraid we'd double-submit receipts. We just found out yesterday, and today is the last day for me to enroll in my plan (which we had been planning to do) so we are in crunch time on deciding. Delightful that his employer is so late telling him.
http://www.tangohealth.com/posts/hsa-compliance-webinar-qa/Can an employee be eligible for the HSA if his spouse has an FSA through her employer? What about a working spouse’s FSA that isn’t known to the primary employer group’s HSA?
That is a complex question. There are Flexible Spending Arrangements (FSA) for various purposes. The most common are for “general purpose” and “limited purpose” healthcare, commuter, and childcare. The “limited purpose” FSAs specifically cover vision, dental and preventive care but exclude other healthcare expenses that would disqualify HSA eligibility. So the answer depends on the kind of FSA it is. Only the “general purpose” healthcare FSA would disqualify an individual or their spouse from HSA eligibility, so for purposes of this response let’s assume that the spouse has a general purpose FSA.
The next question to ask is whether or not the spouse’s FSA can be used for the employee’s expenses. The employee only becomes HSA ineligible if the spouse’s general purpose FSA could be used to cover the employee’s expenses. If the spouse has individual coverage and his FSA only covers himself, the spouse’s general purpose HSA would not make the employee HSA-ineligible.
Employers do not have responsibility under IRS rules for tracking whether an employee’s spouse has an FSA with the spouse’s employer, but it can become an administrative headache and a very negative experience for employer and employee when this is discovered later (hopefully not through an audit!) and the employee and possibly the employer become responsible for penalties and taxes on ineligible contributions. Making sure employees know these rules prior to opening the HSA through repeated communication is recommended. Even just asking if the employee’s spouse has an FSA can alert an employer as to which employees they may need to more carefully screen.
More information can be found in IRS Notice 2008-59, Q&A 8.
As long as the FSA is depleted at the end of the calendar year