Eligibility rules for an HSA

Written by Aimee Reynard
Updated 1 year ago

In order for participants to be eligible for an HSA plan they must be enrolled in an HSA-qualified High-Deductible Health Plan (HDHP). They cannot be covered by any other insurance that reimburses for health expenses (including a medical FSA). Participants cannot be enrolled in any part of Medicare or Medicaid and they cannot be claimed as a dependent on another person’s tax return.

If a participant was on a Medical FSA plan during the prior plan year and is now moving to an HSA plan for the new plan year, there are some additional eligibility requirements to be aware of. If the participant’s FSA plan had a 2.5 month grace period on it, they must have a $0 balance at the end of the prior plan year or wait until the first of the month after the grace period has ended.

For example, if the plan ran from 1/1/2022-12/31/2022 with a grace period until 3/15/2023, the participant is not HSA eligible until 4/1/2023. If the prior plan year did not have a grace period, and instead had a rollover, the rollover funds cannot be moved to a traditional FSA. They would need to be moved to a Limited FSA account, or the rollover must be blocked. Please talk to your Client Success Specialist if you need to add the Limited FSA plan. 

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