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Can I have an HSA and a QSEHRA at the same time?

Wrong Question...


Yes, you can have an HSA and a QSEHRA at the same time but, what you really want to know is if you can make tax free contributions to a Health Savings Account (HSA) in the same tax year you were provided a QSEHRA. That is a bit more complicated, let's jump into it. 


This article was prompted by IRS Notice 2017-67 which provided administrative and procedural guidance on the QSEHRA. The notice indicated a departure from the HRA compatibility requirements which call for a deductible on the HRA equal to the qualifying high deductible health plan (HDHP) deductible. According to the guidance, the QSEHRA is not permitted to impose a deductible therefore, may be disqualifying coverage for those provided the benefit by their employer. The determination comes down to what and whom is covered by the QSEHRA.


Background

Under section 223, individuals who have high deductible health plan (HDHP) coverage and no other disqualifying health coverage may contribute to an  HSA. Individuals who are covered by permitted insurance (defined under section 223(c)(3)) or certain disregarded coverage (defined under section 223(c) (1)(B)), in addition to HDHP coverage, remain eligible to contribute to an HSA.

When we are talking about reimbursement plans, disqualifying coverage would be any plan which provides reimbursement for any benefit which is covered under the high deductible health plan except coverage for accidents, disability, dental care, vision care, or long-term care, and insurance premiums.

QSEHRA Interaction


First, let's establish that the QSEHRA is not elected coverage. Section 9831(d)(2)(A)(ii) requires that the eligible employer provide, rather than offer, a QSEHRA on the same terms to all eligible employees. This means that if the benefit is provided by your employer and you are eligible you may not waive eligibility to circumvent the disqualifying coverage rules.

QSEHRA (non-premium only plan)

Here we are talking about the full QSEHRA, which provides for the reimbursement of all qualified medical expenses including health related insurance premiums. If your employer provides the QSEHRA participants may not make tax free contributions to an HSA when they are covered by the QSEHRA. The full QSEHRA is considered disqualifying coverage under section 223.

Covered Persons


The extent of who is disqualified depends on the QSEHRA's coverage. Schedule A of your Summary Plan Description defines coverage, if eligible expenses does not include amounts paid for dependents expenses then the plan does not disqualify them from making tax free contributions to an HSA. Moreover, the HSA Special Contribution Rule for married spouses says if a spouse has non-HDHP coverage (such as a QSEHRA) that does not cover the other spouse, the uncovered spouse is HSA-eligible. The contribution limit is determined based on the HSA-eligible spouse’s coverage, without applying the special contribution rule. This means that the HSA-eligible spouse may contribute the full amount based on his or her HDHP coverage and no allocation is made to the ineligible spouse.

QSEHRA POP (Premium Only Plan)


Here we are talking about the QSEHRA POP, which limits the reimbursement  to expenses for health related insurance premiums. If your employer provides the QSEHRA-POP participants may make tax free contributions to an HSA when they are covered by the QSEHRA-POP. The QSEHRA-POP is considered disregarded coverage under section 223.

Hopefully this is a helpful primer on the compatibility between HSA contribution and QSEHRA participation. If you have a question, feel free to leave it in the comments and we will respond as quickly as we can.

NOTE: HSA compatibility with the single participant HRA is different than the QSEHRA. Click here to answer the question, Can I have an HSA and HRA at the same time?


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