From: Mark Bole 
Newsgroups: misc.invest.financial-plan
Subject: Re: converting from FSA to HSA
Date: Thu, 26 Jul 2007 10:05:35 -0500
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idp wrote:
> we're facing as a family the decision to move from an HMO+FSA health 
> insurance to an HSA
> 
> in reading some of the Health Savings Account (HSA) literature, it 
> appears there is a restriction that to be eligible, one can not be 
> claimed as dependent on someone else's tax return

That is correct, your dependent can't open his own HSA, but you can open 
one that includes your dependent in the coverage.

  > would it also make sense to pre-load a larger contribution to the HSA
> for the 1st year one enrolls and then use that as a "bank" while 
> reducing future years contributions slightly ? anything else to consider 
> about HSA rules ?

There are annual limits to what you can contribute, tied to the amount 
of the HDHP (high-deductible health plan) you have, so "pre-loading" 
isn't allowed.  If you are going to use the HSA at all, I imagine you'd 
always want to make the maximum contribution allowed.

Is  your decision being driven by losing employer-provided group health 
coverage for one or both of you?  I'm guess family coverage through your 
employer if available will be a better deal than an HSA.  On the other 
hand, if your health remains good, you can use the balance in the HSA 
for any purpose, not just medical expenses, without additional penalty 
after age 65.

You might want to spend some time with IRS Pub 969 to learn more.  Also 
check your state rules; California for example does not allow HSA's and 
treats them like ordinary savings accounts (no deduction for 
contributions, earnings are taxable).

-Mark Bole