FSAs and HSAs

Kibitzer

Our calendar year FSA was amended to provide the 2 and 1/2 month grace period. e are now offering a high-deductable health plan and an HSA as one of our options. Is it true that employees who haven't used up their FSA account can't start contribuuting to an HSA until April? If that's true, can they make up for the 3 months of contributions that they missed?

HRBiker

The way I understand it is that an employee is HSA eligible if the FSA balance is zero at the end of the plan or if the entire remaining FSA balance is contributed to an HSA. But since the HSA contributions are annual amounts, an employee who doesn't become eligible until April, can contribute the full amount in 9 rather than 12 installments.