If you currently have a general purpose Health FSA, but you have chosen the HSA- eligible plan for 2025, make sure you don’t get tripped up by a Health FSA grace period or carryover. Switching from a Health FSA to an HSA
While, in general, grace periods are a good thing, you need to be mindful of them when you move to an HSA.
You must spend your entire Health FSA funds so you have a zero balance before the end of the twelve-month plan year (before the grace period starts).
As long as you do this, you become HSA-eligible immediately at the end of the twelve-month Health FSA year (assuming that you are otherwise HSA-eligible).
If you carry any balance into the grace period (even a single penny), you cannot become HSA-eligible until the 1st day of the month after the grace period ends.
This means you won’t be able to contribute to your HSA until April 1, 2025, and cannot submit expenses incurred prior to April 1, 2025 for reimbursement from your HSA. HSA eligibility is determined on the 1st of every month, so you are not eligible to contribute to your HSA in 2025 until three full months after the Health FSA plan year ends.
7
Made with FlippingBook HTML5