As a TPA we provide Section 125 administration for POP Plans and unreimbursed medical and dependent care spending accounts. We recently had a call from a small employer that was setting up a MSA and HDHP at the advice of their insurance broker and their broker referred them to our office to set up a health FSA. I am the first to admit I have limited knowledge in the area of the Archer MSA's! My question is whether an employer can have a MSA and a FSA. In Publication 969 it specifically states that an employee who participates in a MSA cannot have another health insurance plan, other than the HDHP. Since the FSA is not listed in Publication 969 under the exceptions to "other health insurance", I feel that the FSA would qualify as another health insurance plan, making any employee who participates in the FSA, ineligible from participation in the MSA? While I certainly agree that they would want (and could) implement a Premium Only Plan for the premiums associated with the HDHP (if applicable) and a dependent care plan, I do not believe they could offer a FSA. Comments~

I went to a Sec. 125 seminar in Feb. and we discussed MSA's breifly. We were advised that what you said is true; You can have a POP and MSA, but not FSA and MSA.

Kris, can you email me directly and let me know how you're handling PHI as a 125 TPA? We are one as well, but thankfully, our plans are under $5 million. I'm looking for an easy to ready statement - even though we don't disclose any PHI anywhere, we're still under this - what do you do? My email is bobbi63@msn.com, I would really appreciate your response!

Chris,

Is this employer asking about a true "Archer" MSA or possibly referring to the newer HRA (Health Reimbursement Arrangement)? If it is actually a HRA, then the FSA is permittable.

The only way that I know to do this is to limit the FSA to things not covered at all on the health insurance. For example, the FSA could be for dental expenses only, as there is no dental coverage in the health insurance plan.