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Article added:
01/06/2008 |
V.
HSA - Other Matters
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Q-32. What discrimination rules apply to HSA s?
A-32. If an employer makes HSA contributions, the
employer must make available
comparable contributions on behalf of all "comparable
participating employees" (i.e.,
eligible employees with comparable coverage) during the
same period. Contributions are considered comparable if
they are either the same amount or same percentage of
the deductible under the HDHP. The comparability rule is
applied separately to part-time employees (i.e.,
employees whoare customarily employed for fe wer than 30
hours per week). The comparability rule does not apply
to amounts rolled over from an employee’s HSA or Archer
MSA, or to contributions made through a cafeteria plan.
If employer contributions do not satisfy the
comparability rule during a period, the employer is
subject to an excise tax equal to 35% of the aggregate
amount contributed by the employer to HSA s for that
period.
Example: Employer X offers its collectively bargained
employees three health plans, including an HDHP with
self-only coverage and a $2,000 deductible. For each
employee electing the HDHP self-only coverage, X
contributes $1,000 per year on behalf of the employee to
an HSA . X makes no HSA contributions for employees who
do not elect the HDHP. X’s plans and HSA contributions
satisfy the comparability rule.
Q-33. Can an HSA be offered under a cafeteria plan?
A-33. Yes. Both an HSA and an HDHP may be offered as
options under a cafeteria
plan. Thus, an employee may elect to have amounts
contributed as employer
contributions to an HSA and an HDHP on a
salary-reduction basis.
Q-34. What reporting is required for an HSA ?
A-34. Employer contributions to an HSA must be reported
on the employee’s Form W-2. In addition, information
reporting for HSA s will be similar to information
reporting for Archer MSAs. The IRS will release forms
and instructions, similar to those required for Archer
MSAs, on how to report HSA contributions, deductions,
and distributions.
Q-35. Are HSA s subject to COBRA continuation coverage
under section 4980B?
A-35. No. Like Archer MSAs, HSA s are not subject to
COBRA continuation coverage.
Q-36. How do the rules under section 419 affect
contributions by an employer to an HSA ?
A-36. Contributions by an employer to an HSA are not
subject to the rules under section 419. An HSA is a
trust that is exempt from tax under section 223. Thus,
an HSA is not a “fund” under section 419(e)(3) and,
therefore, is not a “welfare benefit fund” under section
419(e)(1).
Q-37. May eligible individuals use debit, credit or
stored-value cards to receive
distributions from an HSA for qualified medical
expenses?
A-37. Yes.
Q-38. Are HSA s subject to other statutory rules and
provisions?
A-38. Yes. HSA s are subject to other statutory rules and
provisions not addressed in this notice. No inference
should be drawn regarding issues not expressly addressed
in this notice that may be suggested by a particular
question or answer, or by the inclusion or exclusion of
certain questions.
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