Sponsor
Darin Lahood
Representative · R-IL
Representative · R-IL
The bill preserves HSA eligibility and tax benefits for many families with spouses in employer FSAs, but creates administrative burdens and a complex eligibility test that could increase compliance costs and prompt employers to limit FSA flexibility.
People with HSAs who have spouses enrolled in employer FSAs can remain HSA-eligible (and thus continue using HSA funds) as long as the spouse's FSA reimbursements do not exceed eligible expenses.
Eligible individuals can continue making and benefiting from tax-advantaged HSA contributions, preserving pre-tax savings for medical costs.
The law sets a clear effective date (plan years beginning after Dec 31, 2026), giving employers and plan administrators time to adjust plan designs and communications.
Employers and FSA administrators will incur administrative costs to update plan documents, systems, and eligibility procedures to comply with the new rule.
The eligibility test (comparing a spouse's aggregate reimbursements to hypothetical eligible expenses) is complex and may cause confusion, compliance errors, and increased IRS disputes for taxpayers and employers.
Because of compliance risk or uncertainty, some employers may restrict FSA features or limit reimbursements, which would reduce benefit flexibility for employees and families.
Based on analysis of 2 sections of legislative text.
Allows an HSA-eligible individual to keep HDHP status for HSA purposes when their spouse has an FSA, if the spouse’s FSA reimbursements are calculated excluding costs attributable to the HSA-holder.
Official title: To amend the Internal Revenue Code of 1986 to allow contributions to a health savings account when a spouse has a health flexible spending account.
Introduced June 29, 2026 by Darin Lahood · Last progress June 29, 2026
Allows a married person who is otherwise eligible for a Health Savings Account (HSA) to be treated as having high-deductible health plan (HDHP) coverage even when their spouse has a health flexible spending arrangement (FSA), so long as the spouse’s FSA reimbursements for the year do not exceed the amount of expenses that would be eligible if costs related to the HSA-eligible spouse were ignored. The change is made to the Internal Revenue Code and applies to plan years beginning after December 31, 2026. The amendment aims to let more families combine an HSA for one spouse with an FSA for the other without causing HSA ineligibility, increasing flexibility for tax-advantaged health accounts while leaving overall FSA reimbursement limits effectively intact when calculating eligibility for the HSA-holder.