Employer offers QHDHP plan with no HSA account option

[cindy612]

What is the name of your state (only U.S. law)? MD

Open enrollment with small business. They offer three types of plans, HMO, PPO and QHDHP (qualified high deductible health plan).

They also offer flex savings account (FSA)-use it or lose it.

Since the employer can only offer one or the other (FSA or HSA), they have decided to only offer an FSA, even though they will pay the full cost of the employee health insurance equal to the lowest cost plan-the QHDHP.

The deductible is $1200/2400 ind/family. We almost lost money on the FSA last year because my husbands medication changed and there were no out of pocket costs.

If I elect a QHDHP, I want to contribute to an HSA so I can carry over contributions each year.

Questions: Must an employer provide an HSA account option for pre-tax contributions if they offer a QHDHP?

If yes, does the FSA meet that requirement?

If the answer is no to the HSA, then can I open my own HSA account outside my employer and contribute after tax $$ equal to the deductible minus any FSA contributions I elect through the employer?

Thank you for your help.

 

[ecmst12]

If you're contributing after-tax money, that's really just a bank account.

 

[john frankiewic]

HSA accounts can not tied to the employer or insurance carrier by law. The HSA account is owned by you. As such, you alone are responsible for setting up an account. Some banks will work with an employer or carrier to help open an account, but you can go anywhere you want.
FSA's do not qualify as an HSA account. With an HSA you only will have access to a limited FSA if offered. You can use a company sponsered FSA to pay your portion of the premuims and very little else. You can not use a FSA for anything that could be paid by the HSA.
Once you have the HSA account you can then direct deposit money pre-tax. You can also deposit money directly and then deduct it on your tax return making it pre taxed also.

 

[FlyingRon]

I agree with John. While it's not as convenient if the employer doesn't direct deposit into the HSA pretax for you, you're free to do your own and you can deduct it via form 8889.

Information from the IRS here: http://www.irs.gov/publications/p969/ar02.html#en_US_2010_publink1000204020

 

[cindy612]

Thank you John and FlyingRon.