My company just introduced HSA's and my spouse came home and told me that we are not eligible for the HSA since my spouse's company offers a plan with Flexible Spending Accounts. Can you verify?

Great question! Here's my technical answer. It's not the fact that your husband's company offers an FSA that makes you ineligible to open/contribute to an HSA. You only become ineligible for the HSA if he actually enrolls in his employer's FSA and you become covered by that FSA as a dependent/spouse. That would make you enrolled in a health plan that is not a high deductible health plan - hence, making you ineligible for an HSA.

One caveat: If his employer's FSA is considered "limited purpose" (meaning limited to reimbursing for vision, dental, or preventive care) or "post-deductible" (meaning limited to reimbursing medical expenses that occur after the plan deductible is met), that would be ok and you could still be eligible for an HSA.

Your husband's plan probably isn't a limited purpose or post-deductible FSA because they are usually only offered by employers with HSAs - but you can always ask.

Amy Chambers
Priority Health
Director, Consumer Engaged Healthcare
Author, "Health Savings Accounts for Dummies"

OK, since I am a dummy, it is only appropriate that I ask a follow-up question to the Author of "HSAs for Dummies." I'm a little unclear on the "enrollment in the FSA" piece. Can the individual with the health plan that has an FSA attached to it, opt out of the FSA piece and only take the insurance? If they are both eligible for insurance in their jobs, one with a traditional plan and the other with an HDHP, does one plan in effect, lead and the other work as supplemental insurance? Or is it a situation where they have to either pick one plan or the other?

Here's my long response...

Q: Can the individual with the health plan that has an FSA attached to it, opt out of the FSA piece and only take the insurance?

A: Each employer is a little different ? but usually the employer sets it up so that the health insurance election and the FSA election are separate elections. You can opt for one without the other.

Q: If they are both eligible for insurance in their jobs, one with a traditional plan and the other with an HDHP, does one plan in effect, lead and the other work as supplemental insurance? Or is it a situation where they have to either pick one plan or the other?

A: In general - you can be enrolled in more than one health plan at a time. (A few plans out there say that you can?t ? but that?s more on the individual market than the employer-sponsored market.) Anytime you are covered by more than one health plan, coordination of benefits (CO rules apply. You need to look at your health plan documents to see how the plans coordinate benefits via COB. (You are correct when you talk in terms of one plan being ?lead? ? or as we say, ?primary? ? and the other acting as ?supplemental.?) Now - if you have an HDHP (high deductible health plan), it will/should coordinate with your other health plan(s), assuming the terms of the plan allow it. The plan rules then determine how the other plan coordinates with the HDHP. However?here?s the real issue ?even though you can be covered by another plan in addition to your HDHP? and the two health plans coordinate ? it may mess up your ability to contribute to the HSA. Why? In order to open/contribute to an HSA, the account holder must meet four eligibility requirements ? one of which states that you cannot be covered under another plan that?s not also an HDHP:

- Must be covered under qualified high-deductible health plan (HDHP)
- Cannot be covered under another non-HDHP (except ?permitted insurance? like dental, vision, AFLAC)
-Cannot be claimed as a ?dependent?on another's health plan
-Cannot be enrolled in Medicare

The health plans themselves don?t care that you have more than one plan and/or if they are HDHPs. They simply coordinate them. It?s the IRS that cares when you have more than one plan when it comes to HSA contributions. They want to make sure that you?re only participating in HDHP?s and meeting the above eligibility requirements.

Excellent! Thank you.