Does a 2017 FSA Account Have to be Empty to Start a 2018 HSA Account?

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Does 2017 FSA need to be emptied?

One common question many individuals have is whether a 2017 Flexible Spending Account (FSA) must be empty before starting a 2018 Health Savings Account (HSA). The transition from an FSA to an HSA can be confusing, but we're here to help clarify.

Now, let's address the question:

Financially, you do not need to exhaust your 2017 FSA before opening an HSA in 2018, but there are some important considerations:

In conclusion, while you don't need to empty your 2017 FSA to open a 2018 HSA, it's essential to understand the implications of transitioning between these accounts. Consult with your employer's benefits administrator or a financial advisor for personalized guidance.

FSA vs. HSA key differences explained

Firstly, you need to understand the key differences between an FSA and an HSA:

• FSAs are 'use it or lose it,' meaning you typically forfeit any remaining funds at the end of the plan year.
• HSAs rollover funds from year to year, allowing you to build a savings cushion for future healthcare expenses.

Same point: you don’t have to empty

• If you plan to contribute to an HSA in 2018, you cannot continue using your FSA for medical expenses.
• You must have a High Deductible Health Plan (HDHP) to qualify for an HSA.
• If you no longer have an HDHP, you are ineligible to contribute to an HSA but can still use existing HSA funds for qualified expenses.
• You can use FSA funds to pay for eligible healthcare expenses not covered by insurance before switching to an HSA.
• If your employer allows, you may carry over up to $500 of unused FSA funds into the next plan year, though this amount may vary depending on your plan.

When considering the transition from a 2017 Flexible Spending Account (FSA) to a 2018 Health Savings Account (HSA), it's important to know that you don’t have to completely empty your FSA before starting your HSA.