Can I have an HSA and my spouse have an FSA in the same household? Legal or not?

This is actually a good question with some nuance to it. The general rule is that you can't contribute to both an HSA and an FSA in the same tax year - but there's an important exception that might apply to your situation. If your wife's FSA is what's called a "limited purpose FSA" (one that only covers dental and vision expenses), then you're completely fine having both. However, if she has a regular medical FSA that can be used for all qualified medical expenses, then it gets more complicated. Since you file taxes jointly, her FSA would technically make you ineligible for HSA contributions because the IRS considers her FSA available to pay for your medical expenses (even if you don't use it that way in practice). But there's still a potential workaround: If her FSA plan documents specifically state that it can only be used for her expenses and not for other family members, then you might still qualify for HSA contributions. This is something you'd want to confirm with her HR department by reviewing the specific plan documents.

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I was skeptical about using an AI for tax advice too, but I finally tried https://taxr.ai when my CPA gave me a vague answer about my HSA/FSA situation. The difference was night and day! It found specific language in my wife's FSA documentation showing it was a "limited purpose" FSA that only covered vision and dental, meaning we were 100% compliant with HSA rules. The report showed exactly which paragraph in the plan document confirmed this, and explained how this affected our tax situation. My CPA actually asked for a copy of the report because it was so detailed. Just filed our taxes with both accounts and no issues at all. Totally worth it for the peace of mind alone.

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I think everyone's overlooking something important here - you mentioned your wife's employer offers an FSA, but have you checked if it's actually a "Dependent Care FSA" rather than a medical FSA? Those are totally different and CAN be combined with an HSA with no issues. Many people confuse the two.

Quick tip from someone who works in benefits admin - check if either of your plans allows mid-year changes to FSA/HSA elections based on a "change in benefit eligibility." If her FSA is making your HSA contributions problematic, some plans allow you to adjust mid-year when you discover this kind of conflict.

I went through this exact same situation last year and here's what I learned: The key issue isn't whether you're on separate health plans, but whether her FSA can be used for your family's medical expenses when you file jointly. Since you mentioned she uses her FSA for prescriptions and doctor visits, it sounds like a general medical FSA. Even though you have separate insurance, the IRS considers her FSA as available to cover your medical expenses because you file taxes together. This technically disqualifies you from HSA contributions. However, I'd strongly recommend getting the actual plan documents from her HR department - not just asking them verbally. Look specifically for language about who can use the FSA funds. Some plans restrict usage to the employee only, which could change everything. If it turns out her FSA does disqualify your HSA, ask her benefits team about switching to a limited-purpose FSA during the next enrollment period. Many employers now offer this option specifically for situations like yours. You'd lose some FSA flexibility but gain HSA eligibility, which is often worth it given the triple tax advantage of HSAs.