{"id":1139,"date":"2018-02-22T16:39:56","date_gmt":"2018-02-22T16:39:56","guid":{"rendered":"https:\/\/albanknews.com\/?p=1139"},"modified":"2018-02-22T16:41:40","modified_gmt":"2018-02-22T16:41:40","slug":"the-hr-director-and-hsa-eligibility","status":"publish","type":"post","link":"https:\/\/albanknews.com\/?p=1139","title":{"rendered":"The HR Director and HSA Eligibility"},"content":{"rendered":"

This Alert concerns employers who currently offer – or are contemplating offering – a High Deductible Health Plan (HDHP).<\/strong> When such plan is in place, employees may<\/em> qualify for a tax-advantaged Health Savings Account (HSA) that allows them to save for future medical expenses not covered by the HDHP. Contributions to an HSA are deductible (and can be made on a pre-tax basis and even be matched by the employer). Disbursements from the account for qualified<\/em> medical expenses are not taxed. HDHP premiums are normally less than a typical PPO plan, and the HSA permits the person to accumulate funds for future claims costs. These arrangements are well-suited for younger employees or others who typically do not incur large health claims during a year, but may not be as attractive to those with health issues and\/or who might be on an expensive monthly medication regimen.<\/p>\n

Based on the volume of inquiries we receive from employers, it is evident that HR directors field numerous questions from employees regarding HSA eligibility. What advice should HR render? Best practices dictate – very little<\/em>. An HSA is an individual account and not an employer-sponsored health plan. As such, any representation by an employer to an employee as to his\/her eligibility for its tax benefits may produce troubling results down the line.<\/p>\n

The first requirement for HSA <\/u>eligibility is that the individual be covered by a qualified high deductible health plan. A qualified HDHP is one with a minimum deductible of $1,350 for single-only coverage and $2,700 for other-than-single; and a maximum out-of-pocket of $6,550 single; $13,100 family. (The maximum contribution to an HSA is $3,450 for a single person and $6,900 for a family account.) These are 2018 numbers.<\/p>\n

The second HSA eligibility requirement<\/u> is that the person not be covered by any other plan that is not a qualified HDHP. These rules are clearly laid out in the tax code; specifically, IRC \u00a7223(c)(1)(A)\u2026.<\/p>\n

(c)\u00a0Definitions and special rules.<\/strong> For purposes of this section\u2014<\/p>\n

(1)\u00a0Eligible individual.<\/strong><\/p>\n

(A)\u00a0 In general. The term \u201celigible individual\u201d means, with respect to any month, any individual if\u2014<\/p>\n

(i)\u00a0 such individual is covered under a high deductible health plan as of the 1st day of such month, and<\/p>\n

(ii)\u00a0 such individual is not, while covered under a high deductible health plan, covered under any health plan\u2014<\/p>\n

(I)\u00a0 which is not a high deductible health plan, and<\/p>\n

(II)\u00a0 which provides coverage for any benefit which is covered under the high deductible health plan.<\/p>\n

While this seems simple enough, much consternation occurs over the issue of what is considered \u201cother coverage\u201d that will block one\u2019s eligibility for a health savings account. IRS Publication 969<\/em> is considered the \u201cBible\u201d of health savings accounts. HR directors may even want to download and print a copy of this document for future reference. Pub 969 discusses several types of coverage that are not deemed \u201cother coverage\u201d and thus are safe. Further, there have been several IRS Notices over recent years that address even other programs; issued as questions arise from IRS field agents. Based on Pub 969 and the other IRS guidance, this is, we think, a pretty comprehensive listing of plans\/programs that should be A-OK and not cause eligibility issues\u2026..<\/p>\n