Confused about HSA eligibility

Submitted by blazedlawyer t3_z8vvl8 in personalfinance

I just got a new job and I'm enrolling in benefits. There are six options for health insurance, including two labeled "HSA." Those plans are about $200/month. I'm already covered under my wife's healthcare plan, so I was leaning toward the plan that is $0/month. However, the free plan is not labeled HSA and does not trigger the option to sign up for HSA on the employer's portal. I'd like to sign up for a privately managed HSA if possible. The free plan's maximum out of pocket contribution is $8,700, which exceeds $7,500 I see as the $2023 number.

Is the $7,500 max out of pocket a cap or the threshold? Basically, will the play qualify as HDHP?

If not, should I sign up for the company's FSA, even if it does not roll over unused funds?

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antoniosrevenge t1_iydj6n7 wrote

Is your wife’s plan an HDHP?

You can’t contribute to an HSA if you’re also covered by a nonHDHP

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blazedlawyer OP t1_iydjw3u wrote

Thank you for the response. I guess I can't do a HSA, because my wife has excellent insurance with no deductible. What are your thoughts on contributing to a FSA with no rollover?

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antoniosrevenge t1_iydkhoh wrote

If you have a reason to use it then great, otherwise as you noted it’s use it or lose it

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pancak3d t1_iydkptn wrote

Need to look at wife's plan and decide if there's anything not covered that you'd predictably use the FSA for. Otherwise there's no purpose.

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blazedlawyer OP t1_iyemfbz wrote

It still has copays and does not cover things like ankle braces and covid tests at the pharmacy.

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sciguyCO t1_iydossg wrote

>The free plan's maximum out of pocket contribution is $8,700, which exceeds $7,500 I see as the $2023 number.
>
>Is the $7,500 max out of pocket a cap or the threshold? Basically, will the play qualify as HDHP?

To count as an HSA eligible HDHP (using 2023's individual coverage thresholds), the plan's out-of-pocket maximum must be lower than $7500. There are also a couple other criteria for HSA eligibility: the plan deductible must be higher than $1500 and the plan cannot cover anything (other than preventative care) prior to meeting that deductible. So if the plan involves co-pays prior to deductible, it won't count as HSA eligible.

In practically all cases, if a plan is HSA eligible then it will say so. If that's not part of the description, it's almost never HSA eligible. So enrolling in that plan means that you would not be allowed to have an HSA, even one you opened independently. Ok, technically you can open one, but you're not eligible to contribute anything into it, which makes it effectively useless.

>If not, should I sign up for the company's FSA, even if it does not roll over unused funds?

Do you have any known (or at least high-likelihood) medical expenses for 2023? If so, then you can enroll in the FSA up to that dollar amount. Think of the tax savings of the FSA as a "discount" on your medical bills. You contribute, say, $1000 into the FSA but your take-home only goes down $800 or so. You can then use the FSA to pay for $1000 of medical costs, saving yourself $200. And that FSA money can be used for your expenses, your wife's, or dependents (if any), even when they're not covered by your insurance plan.

One benefit of an FSA vs. an HSA is that the full dollar amount is available to use immediately at the start of the plan year. You don't have to wait to "fill up" the account from your paycheck deductions. The biggest drawback is the FSA's "use it or lose it", though some will rollover some dollar amount into the next year. Or it'll have a grace period where you can use 2023 FSA dollars for expenses incurred during the first few months of 2024.

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pancak3d t1_iydjinv wrote

If you want to remain covered under wife's plan, you should decline coverage.

You can't be covered under wife's non-HSA plan and also try to get your own HSA-eligible coverage. It's one or the other.

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blazedlawyer OP t1_iydk1s7 wrote

Thank you. I can be double covered though, right? And just forego the ability to contribute to HSA

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pancak3d t1_iydkfba wrote

Exactly -- you can be double covered, just won't be eligible for HSA contributions.

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nolesrule t1_iydk7sy wrote

In addition to what the others said, if wife funds a medical FSA, you wouldn't be eligible even if you switch to your own HSA eligible plan because FSA is considered other medical coverage since it can be used to pay for your expenses regardless of what plan you are on.

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WakeRider11 t1_iydohba wrote

Personally if my spouse's insurance was that good, I wouldn't bother enrolling in another policy as back-up. I would just be nervous that it would be an administrative nightmare considering the two companies may want to have some coordination of benefits. I've never been in that situation, so I'm just guessing, but would be interested to see other people's thoughts.

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