The IRS Prohibits Enrollment in a Medical FSA and an HSA at the same time

If you or your spouse/qualified tax-dependent registered domestic partner is enrolled in a Medical FSA, and one of you is also enrolled in a CDHP with a corresponding HSA, you are not in compliance with IRS rules.

The Internal Revenue Code prohibits dual enrollment or dual coverage in a CDHP/HSA and a Medical FSA plan.

There is an exception to this dual enrollment coverage if the FSA is a Limited Purpose FSA.  A Limited Purpose FSA restricts the use of the FSA funds to non-medical expenses (e.g., vision and dental). As of 2022, WSU offers a Limited Purpose FSA. If your spouse/qualified tax-dependent state-registered domestic partner is enrolled in a Limited Purpose FSA, you may be able to continue coverage in your CDHP/HSA.

Normally employees ensure they are properly enrolled in appropriate coverage during the annual open enrollment period.  Outside of the normal open enrollment period, changes to coverage can occur if a Special Open Enrollment (SOE) event occurs.  SOE events could primarily would be when a Spouse/Partner/Parent enrolls in or loses enrollment in a FSA or HSA throughout the calendar year.  If this occurs, you must initiate your potential change in benefits no later than within 60 days of when the change occurs, but ideally address as soon as possible.  If you were to request to make the change after 60 days, you would not be able to make the change then, and would have to address during the annual open enrollment period or if another SOE event arose.   

If you find you are in a situation where you are out of compliance with the IRS rules, you most likely will be responsible to pay income tax on the HSA contributions.  Additionally, you may also be subject to an IRS penalty.  WSU cannot offer tax advice, so it is strongly advised that you consult with a tax advisor

In Addition . . .

Please visit Health Equity for PEBB for other scenarios in which enrollment in a CDHP/HSA may not be appropriate.

Any questions regarding your HSA can be directed to HealthEquity, the HSA plan administrator, at 844-351-6853 or visit Health Equity for PEBB.

Any questions regarding your FSA can be directed to Navia Benefits Solutions (formerly Flex-Plan Services), the FSA plan administrator, at 800-669-3539, customerservice@naviabenefits.com or visit Navia Benefits for PEBB.

To have any other questions addressed, please contact HRS-Pullman at 509-335-4521 or hrs@wsu.edu. Depending on your question, you may be redirected to HealthEquity, Navia Benefits Solutions, or your tax advisor.

Additional Resources

FSA-HSA Comparison Chart
IRS HSA Publication

Navia Benefit Solutions

Navia Benefits for PEBB
Customer Service (800)669-3539
Claims Fax (866)535-9227
customerservice@naviabenefits.com

Health Equity

Health Equity for PEBB
Customer Service: (844) 351-6853