The employee was enrolled in the employer's HDHP and made contributions to his HSA for himself and children through March 09. As of 4/1/09 his wife met the eligibility requirements to participate in her employer's family Non-HDHP. The husband dropped his coverage with his employer and went to her plan. I know that a change in insurance does not warrant a change in the FSA Medical account, but what about the FSA Limited Medical. That account was created as a means to allow employees to keep their HSA eligibility, but what happens when they do not need to worry about their eligibility anymore? Can the cafe plan documents be written to allow such changes? Has anyone found any informal or formal comments from the IRS on such a change? Any help is much appreciated.

thanks!

While it only applies to a limited number of eligible expenses, a limited-purpose FSA is still an FSA so all the FSA rules would seem to apply unless someone knows of special restrictions/provisions that aren't readily apparent to me.