IRS
What you need to know
Is an employer allowed to fund one group/class of employees differently than others?
Discrimination rules apply to HSAs. Employers can make contributions to employees’ HSAs. The employer may fund the account based on family tier or on salary, provided the employer funds more for lower-paid employees. They deduct the contributions on the “employee benefit programs” line of the business income tax return for the year in which the contributions were made. If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. If you are filing Form 1040, Schedule C, this is Part II, line 14.
Comparable contributions: If you decide to make contributions, you must make comparable contributions to all comparable participating employees’ HSAs. Your contributions are comparable if they are either:
- The same amount
- The same percentage of the annual deductible limit under the HDHP covering the employees
The comparability rules do not apply to contributions made through a cafeteria plan.
Coaches' Takeaway
An important consideration for employers is how much HSA funding they will provide, and how often. The employer determines how much they can afford to contribute to employee HSAs and then decides whether lump sum, monthly, quarterly or annual funding is most appropriate. By working with their Benefits Advisor and health plan, the employer can determine the portion of their premium savings that can be re-invested into their employees’ HSAs, and then look at their cash flow to determine the ideal frequency of funding.
If you decide to make contributions, you must make comparable contributions to all comparable participating employees’ HSAs.
Tools & Resources
CDHPCoach’s Storage Facility, where the Coach has organized and compiled a vast amount of tools and resources for you to access.
Library
Housed here are key components and information within the book, Bend the Healthcare Trend which was the impetus behind the CDHPCoach.
IRS
What you need to know