Hello,
I've been doing research on my quandary but am not sure I've truly got this figured out. Hoping the community can help! Here is the situation:
I have a non-HDHP insurance plan through my employer and enrolled in a general purpose health FSA for the plan year July 1, 2022 - June 30, 2023. At the same time, my husband has an HDHP & HSA through his employer (plan year Jan 1 - Dec 31, it's been in place since 2015). We are both on separate self-only insurance plans. I didn't realize until today that we can't have both an FSA and HSA at the same time.
Since my husband's HDHP/HSA was in place for 6 months prior to the start of my FSA (I assume this would be considered a disqualifying event), is the year prorated and he could keep $1825 in his HSA, or would the entire year be disqualified?
Along those lines, since my FSA account will be spent down to $0 by the end of my plan year (June 30, 2022), is it ok that he has been contributing to his HSA this plan year? It seemed like this could also be prorated for the 6 months without FSA and he could contribute $1925 for the year, or the full amount ($3850) with the 'last-month rule' since he would be enrolled/eligible on Dec 1 and through Dec 31 of the next year (provided the entire year is not disqualified). I won't be doing another FSA 😉
Depending on the answers to the questions above it sounds like I've got a couple of options to fix this?
1. Submit an amended tax return for 2023 - take out the excess contributions plus any interest accrued, claim this as taxable income, and pay the income tax and 6% excise tax. This could either be $1825 if prorated or the full $3650 if not.
2. Reduce HSA contributions this year by the excess last year. Pay a 6% excise tax on the excess on the 2024 tax return. Again this could either be $1825 if prorated or the full $3650 if not. Depending on the amount and if he can do the last-month rule, he may have to take out contributions made this year as excess. This would be before the 2024 tax filing deadline.
Does this sound correct?
Thanks!
