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Client has a HSA and wife an FSA. Has only had since the spring. Since they can't have each, if wife's FSA balance is zero when policy ends, are the HSA contributions made by the husband still allowable?
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I think your client must wait to fund his HSA until wife's FSA is terminated. Even if her FSA has a zero balance, the plan is still open, and as you said you can't have both
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So would he need to return the contributions made to his HSA already? Or could she return hers?
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If your client funded an HSA while his wife had an open FSA then you need to remove funds including any interest or pay a 6% excise tax. Your client cannot open an HSA while his wife's FSA is open, even if it doesn't have funds. There is a way for his wife to have a limited FSA, and your client to have a HSA, but I am not familiar with the rules. Maybe someone who is will jump in.
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Standard Health Care Flexible Spending Accounts (HCFSAs) which may reimburse medical expenses are disqualifying coverage for both an individual as well as their spouse for purposes of the tax benefits of a health savings account (HSA). Employees wishing to open and contribute to an HSA (or have employer contributions into their HSA) would not be eligible if their spouse has a HCFSA (unless the FSA is a limited purpose HCFSA with reimbursements restricted to dental and vision expenses).