I know that there is a 2½-month grace period for a flexible spending account (FSA). Does that impact an individuals eligibility for an HSA?
An FSA grace period does not disqualify individuals from establishing an HSA if they have a zero balance on the last day of the plan year. If individuals do not have a zero balance on the last day of the plan year, they cannot establish an HSA until after the 2½-month grace period has expired, unless they roll over the FSA funds into an HSA. Example 1: Bob participates in a calendar year FSA with a 2½ month grace period ending March 15 of the following year. He receives reimbursement for his full election amount on December 15, 2007 and has a $0 balance on December 31, 2007. Since he has a $0 balance, he can establish an HSA on January 1, 2008 instead of April 1, 2008. The grace period does not make him ineligible for an HSA. Example 2: Bob participates in a calendar year FSA with a 2½-month grace period ending March 15 of the following year. Bob does not receive reimbursement for his full election amount by December 15, 2007, and has a balance in his FSA on December 31, 2007. Bob cann
Related Questions
- Can an individual participate in an HSA during the grace period of participation in an FSA account? What if the individual has exhausted their account before the grace period?
- Im on the HDHP and participate in the Health Savings Account (HSA). Can I also participate in the Health Care Flexible Spending Account (FSA) through WageWorks?
- I know that there is a 2½-month grace period for a flexible spending account (FSA). Does that impact an individuals eligibility for an HSA?
