The IRS Deductions Blog

Question: Electing a high deductible med plan/HSA compatible.. can we discontinue the FSA?

Would this be a qualifying event? Our employees want to cancel the FSA since they can now get a HSA account. Our rep has not gotten back to me and I need an answer asap. Any help is appreciated.

Also, is this a IRS decision or can the Flex spending company decide what they want?
thanks for your answer but they dont want to keep it so I am seeing if we can discontinue it.

Answer: No, it is not a qualifying event. Further, if they have a FSA, they are not eligible to open a Health Savings Account. This means, if they elect the HDHP, and they are already enrolled in a FSA that is not defined as a “limited use” FSA, they will have to pay their out of pocket expenses from the FSA, and open a Health Savings Account in 2010. The FSA plan document would need to specifically state that is for post-Deductible Expenses, and othe QME not covered by the Group Health Insurance plan.

Regualtions are from the IRS, not the plan administrator.

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