HSA and FSA Conflict for Same Household - Untangling the 2024 Dilemma

The IRS looks at HSA eligibility on a month-by-month basis. For each month that you or your spouse has an active FSA, neither of you is eligible to contribute to an HSA for that month. This is because the FSA is considered "other coverage" that makes you ineligible for HSA contributions. For the months where you had both active, you'll need to remove those HSA contributions (both yours and your employer's) to avoid the 6% excess contribution penalty. The removal needs to happen before your tax filing deadline (including extensions). If your husband leaves his job mid-year and that terminates the FSA, you could regain HSA eligibility for the remaining months of the year. At that point, you could contribute up to the prorated amount of the annual limit (calculated as the annual limit divided by 12, then multiplied by the number of eligible months). The employer contribution is unfortunately treated the same as your personal contributions - it counts toward your annual limit and would need to be removed for any ineligible months.

I went through something similar last year and found this amazing tool that saved me hours of headache - taxr.ai (https://taxr.ai). It analyzes your specific situation and tells you exactly what to do about overlapping tax-advantaged accounts. I uploaded my pay stubs showing both my HSA and my wife's FSA contributions and the tool immediately calculated how much I needed to remove from my HSA to avoid penalties. It also generated a letter I could send to my HSA administrator explaining the situation and requesting the correct withdrawal amount. The best part was it showed me exactly how to report everything correctly on my taxes - including which forms I needed to file and which boxes to check. Seriously saved me from making an expensive mistake!

Just wanted to follow up here! I tried taxr.ai after seeing the recommendation and it was incredibly helpful. I uploaded my HSA statements and my husband's FSA enrollment info, and it gave me a detailed monthly breakdown showing exactly which contributions I needed to remove and which I could keep. The most helpful part was that it showed me I could actually keep more of my employer's HSA contribution than I thought. Since my husband is leaving his job in June, it calculated that I'm HSA-eligible for the months after his FSA terminates, which means I can keep the prorated portion of both my contributions and my employer's contribution for those months. It even generated a custom letter to send to my HSA administrator explaining the situation and requesting the specific withdrawal amount. Took about 15 minutes total and saved me hours of research and stress!

If you're having trouble getting answers from your HSA administrator or HR department about this situation, I highly recommend using Claimyr (https://claimyr.com). I was in a similar situation with overlapping benefits and couldn't get through to anyone at my HSA provider for weeks. Claimyr got me connected to a real person at my HSA administrator in under 5 minutes instead of waiting on hold for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The rep I spoke with immediately understood my situation and helped me process the removal of excess contributions over the phone. They even sent me confirmation documentation I could use for my tax records. Saved me from having to send multiple emails and waiting days for responses.

I have to admit I was completely wrong about Claimyr. After my last comment, I decided to try it myself since I was getting nowhere with my HSA administrator about a similar FSA/HSA overlap issue. I was connected to a real person at my HSA provider in about 4 minutes when I had previously spent over an hour on hold without reaching anyone. The representative helped me calculate exactly how much of my HSA contributions needed to be removed and processed the request while I was on the phone. The documentation they sent me afterward clearly showed which contributions were being returned and confirmed that this would help me avoid the 6% excess contribution penalty. Honestly wish I had known about this service weeks ago when I first discovered my HSA/FSA problem. Would have saved me so much stress!

Don't panic too much about this. I had the same issue in 2023. Here's what you should do: 1) Call your HSA administrator ASAP and explain the situation 2) They'll help you calculate the exact amount you need to remove as excess contributions 3) Make sure you get this done before your tax filing deadline The good news is if your husband does leave his job mid-year, you'll be HSA eligible for the remaining months of the year. You can use the Last-Month Rule to potentially contribute more, but be careful with that since it requires you to remain HSA eligible for all of 2025 as well.

Everyone is focusing on fixing the problem, but don't forget to actually USE the FSA money before your husband leaves his job! If he quits mid-year, depending on the plan terms, you might lose any unspent FSA funds. I'd recommend scheduling any eligible medical expenses you were planning to have this year ASAP. Dental work, vision exams, prescription refills, etc. That way you at least get the benefit of the tax-free money before it potentially disappears.

This is a really tricky situation, but you're not alone! I went through something similar last year. One thing I'd add to the great advice already given - make sure you keep detailed records of all the dates and amounts involved. The IRS is very specific about month-by-month eligibility for HSAs. When you contact your HSA administrator to remove the excess contributions, ask them to provide written documentation showing the calculation they used and which months they considered you ineligible. This will be crucial for your tax filing. Also, don't forget about state tax implications if you live in a state that taxes HSA contributions differently than federal. Some states don't recognize HSA tax benefits at all, which could affect how you handle the excess contribution removal. The silver lining is that once your husband changes jobs and the FSA issue is resolved, you'll have a much cleaner setup going forward. Just make sure to double-check all your benefits elections during his new employer's enrollment process!