Married filing separately: Can I have an FSA while my husband has an HSA?

Question

If my husband and I file our taxes as married but filing separately and I am covered under his HDHP with HSA can I have an FSA through my employer? His employer will contribute $1400 to HSA but our deductible is $3000 and out of pocket maximum of $6000. He can't afford to contribute any additional amount to the HSA. So I am wanting to get an FSA through my employer to pay for my part of the deductible.

Answer 1

Unfortunately, you cannot use the FSA with your employer, because your husband is automatically eligible to have his medical expenses paid for out of your FSA. If you do set up an FSA with your employer, your husband (and his employer) would no longer be able to contribute to his HSA.

You do have a couple of options:

• Your husband could contribute to his HSA. I know you said that he can't afford it, but apparently you can, so between the two of you, you have the money to contribute. However, since you are filing separately, your husband would need to deduct the contributions to his HSA on his tax return.

• You could open up your own HSA. Since you are covered by your husband's HDHP, and assuming that you have no other medical coverage (and no FSA), you can open up your own HSA and contribute to it.* This is a better option than the FSA anyway, since any money you put into your HSA is yours to keep (unlike the FSA, which has a yearly use-it-or-lose-it feature). If you do this, be aware that the total contribution limit for both you and your husband together is the family limit ($6750 in 2016). You need to subtract the amount that your husband's employer contributed to his HSA, and then you and your husband can split up the remaining contribution limit however you see fit. You can pay for both of your medical expenses out of either HSA. This option would also allow you to deduct the contributions you are paying for on your own tax return.

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* This assumes that you meet all the requirements to be an HSA eligible individual. From IRS Publication 969:

To be an eligible individual and qualify for an HSA, you must meet the following requirements.

• You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
• You have no other health coverage except what is permitted under Other health coverage , later.
• You aren’t enrolled in Medicare.
• You can’t be claimed as a dependent on someone else's 2016 tax return.