Ruling Outlines Interaction Among HSAs, FSAs, HRAs

The U.S. Treasury Department and Internal Revenue Service (IRS) have issued guidance under which employees may contribute to a health savings account (HSA) when they are also covered by a flexible spending account (FSA) or health reimbursement arrangement (HRA).

Tax-deductible contributions for an HSA are allowed for employees covered under a high-deductible health plan (HDHP), but not simultaneously covered under another health plan that pays for services before the HDHP's deductible is met.

Under Revenue Ruling 2004-45, the Treasury and IRS outlined five scenarios regarding the interaction among HSAs, FSAs, and HRAs:

1. HSA contributions are not allowed when a person is covered by an FSA and/or HRA that pays for medical expenses before the deductible is met.
2. HSA contributions are permitted when the FSA and/or HRA pays only for certain benefits, such as vision, dental, and preventive care.
3. If HRA payments are suspended, HSA contributions are allowed during the suspension period.
4. If the FSA and/or HRA pays for medical expenses only after the HDHP deductible is met, HSA contributions are permitted.
5. HSA contributions are permitted when HRAs pay only for medical expenses after retirement.