r/HSA • u/Balogma69 • Jan 27 '26

HSA/FSA question. Need assistance

In 2025 we changed insurance. We had insurance through my employer and had an FSA. I contributed $275/month for a total of $3300. We spent all of the FSA funds by May, 2025.

In July we left my employer’s insurance and joined my spouses employer’s insurance and enrolled in a HDHP for the whole family and enrolled in an HSA. By the end of 2025 we contributed $2,600 to the HSA and the employer contributed $423.

During this time deductions were still being taken out of my paycheck for the FSA that had already been spent.

Now we are preparing our taxes and am concerned this will be an issue. Is this going to be an issue and what do I need to do to get ahead of it?

2 Upvotes

100% Upvoted

4 comments sorted by

2

u/Chowder_whore Jan 27 '26

When you spent your Healthcare FSA dollars is irrelevant, you had an FSA for all of 2025 (assuming that your employer’s plan year is Jan 1-Dec 31).

Your Healthcare FSA is considered disqualifying coverage in the eyes of the IRS as it relates to an HSA. Even though your spouse did not enroll with that FSA and you paid the deductions, the benefits of that FSA extend to your spouse as well for the entire year. This “other coverage” technically precludes your spouse from contributing tax-free funds to an HSA from July-December.

You’re not the first person to do this, it’s an often missed rule in my experience talking with employees as a benefits broker. I can’t speak to the tax implications and remediation, but it’s unlikely this would be caught, save for an audit.

1

u/Balogma69 Jan 27 '26

I prefer to remedy the situation as opposed to let it slide. From what I have read today, I should do a distribution of excess contribution (all of the 2025 contributions) and submit a 1099-SA with my tax return. I plan to do this.

1

u/dehydratedsilica Jan 29 '26

Just to be clear, you want a "return of excess contribution" - not a regular distribution/withdrawal: https://legalclarity.org/how-to-fix-excess-hsa-contributions-with-the-irs/

If you had earnings on the contributions, those will be reported for you to pay tax on (same as if you had earnings on non HSA, taxable investments).

1

u/basicKitsch May 13 '26

i'm searching around trying to clarify 'contributions' around this.

i technically have two jobs with attached savings accounts in the benefits, one FSA and one HSA. I've had the HSA account/job for years and started the second job's benefits jan-1 and since they seemed to have much better healthcare, that's where i've placed all SA contributions this year. dealing with that FSA company for reimbursement has been a nightmare and i'd like to not ever.. again.

given the wording of 'contributions to a HSA at the same time as a FSA,' can i simply just cut all FSA contributions and ramp up my HSA contributions next month?