4

In my old job I had a HDHP and HSA. Midyear, I started a new job and switched to a standard insurance plan and an FSA.

Can I submit receipts for expenses from January to the FSA that I just opened in October? (These would be expenses I did not use the HSA for).

Relatedly, can I still put money in my HSA until the end of the year? Or did I instantly become ineligible for that the day my new insurance kicked in?

5

The FSA can only pay for expenses incurred after it was open. This also applies in case of a mid-year change in election (such as due to marriage, divorce, child birth, etc.)

For example, according to this page:

You can only be reimbursed for qualifying expenses, from the election that was in place at the time the expense was incurred.

So, say you had $500 available from January to June, then on July 1 had a qualifying event, you then elected $2000. You can be reimbursed for up to $500 in expenses incurred prior to July 1, and then an additional $1500 in expenses incurred after (up to $2000 if you didn't use your full $500).

More specifically, from the IRS Publication:

Generally, distributions from a health FSA must be paid only to reimburse you for qualified medical expenses you incurred during the period of coverage.

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The HSA question is more complicated. I would talk to a tax accountant, or at minimum your benefits coordinator. Also read the publication I linked above, the first part is about HSAs. The short answer to your specific question: stop contributing to the HSA, unless you were contributing well under the limit of the HSA. If you know your limit, and you know you're under it, you can continue contributing until April 15 of next year:

If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual.

The general rule is you can contribute up to (1/12)*(your limit)*(number of months you were eligible). So, if you changed jobs Oct 1, and you're single, then you could contribute (3250)*(1/12)*(9), or just over $2400 in total for the year. If you've contributed less than that to date, you may continue contributing up to that amount - but again, contact your benefits coordinator or preferably a tax accountant, as the rules can be complicated.

You definitely cannot deduct any expenses from the account that you incur after you are no longer eligible, and the rules on distributions are pretty complicated - and if you get it wrong, you may owe a 10% penalty on top of the tax you would normally owe, so there is significant incentive not to get it wrong.

  • I have a similar issue with a Dependent Child FSA. Child had preschool expenses Jan - May. Had full amount elected, but I left company in Sept. At new company, I elected for the reminding expenses I hadn't paid yet. When I went to get reimbursed for them with my new companies FSA, I was told it was outside the coverage time. Can I submit to my previous company's FSA even if I didn't pay in the entire amount? – Daryl Feb 26 '18 at 14:08
  • @Daryl You should open a new question for that. – Joe Feb 26 '18 at 15:40
  • Done: money.stackexchange.com/questions/91325/… – Daryl Feb 26 '18 at 15:57

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