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HSA to FSA midyear?

Home Insurance HSA to FSA midyear?

  • Avatar OSman 
    Participant
    Status: Physician, Dentist
    Posts: 23
    Joined: 12/20/2018

    My wife just had our third child a couple weeks ago. I elected to keep the high deductible plan up until birth so could contribute 4 months worth to HSA but am obviously switching to better coverage so am not stuck with the larger bill for delivery. Since will have better coverage for the rest of the year I am probably going to go ahead and get the snip snip and my wife may end up getting LASIK this year as well. I am having a hard time finding this specific scenario as it relates to FSA funds. Does anyone know if I am allowed to contribute to FSA for the remainder of the year? Should it be pro rated like the HSA? Can I max it out? Can I contribute at all? Will be going back to HSA for next year.

    Thanks in advance

    OSman

    #214338 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7326
    Joined: 01/09/2016

    I am pretty sure you have to elect FSA contributions at the beginning of the plan year to qualify to participate. Check with your plan provider but you likely can elect only during open enrollment. You-know-who – please feel free to correct me! 😉

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #214367 Reply
    Liked by spiritrider
    Avatar spiritrider 
    Participant
    Status: Small Business Owner
    Posts: 1709
    Joined: 02/01/2016

    Section 125 mid-year election changes are extremely complicated with FSA rules adding an additional layer of complexity. The only one who can tell you the exact answer is your section 125 plan administrator. I wouldn’t necessarily trust some random HR rep. They do not necessarily fully understand the rules. I am not a section 125 expert, but will give you my understanding of the rules.

    There are very specific rules for changing elections/enrollments in section 125 plans:

    • Any change of election/enrollment is subject to a qualifying life event QLE (birth).
    • Any change of election/enrollment must be consistent with that QLE (birth).
    • There are HIPPA special enrollment rights for births.
    • FSA enrollment/disenrollment is only allowed for changes in eligibility (the baby’s).
    • Election/enrollment must be within plan deadlines. Usually 30 days, occasionally 60 days.

    I believe jfoxcpacfp is correct when it comes to you and your wife. This is a change of status event, but neither you or your wife have a change in eligibility that would allow you to be covered under an FSA. However, the baby is newly eligible which would allow you enroll in an FSA for the baby and only the baby’s expenses. Under HIPPA special enrollment rights, salary reductions may pay for retroactive coverage to the date of birth.

    #214397 Reply
    Liked by jfoxcpacfp
    Avatar tylerjw12 
    Participant
    Status: Spouse
    Posts: 5
    Joined: 05/23/2016

    IRS rules stipulate that employers should allow you to change from a QHDHP that allows HSA to a PPO plan that allows FSA. You also should be able to elect the full amount of the FSA when you change plans. The trick with eligibility of electing these is you can’t be contributing to (or actively covered by) both at the same time.

    A word of caution: the PPO may not be the better deal for you. Lots of factors at play other than deductible. Also, not sure you’ll be able to use the birth of your child (congrats, btw) as the reason to change plans AND file the claims against the new plan. I reason that the delivery fee would be charged as a claim on your spouse under the QHDHP. You probably paid a portion of the delivery fee at 20-something weeks pregnant. Then the coverage on the new plan would begin upon birth of your child.

    #215117 Reply

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