Employer Health Savings Account (HSA) Funding Policy
We've recently had much discussion regarding the employer HSA funding we offer our staff who are enrolled on our HDHP plan. We give employees on a single HDHP plan $550 annually and those on a family plan $750 annually.
The question is: Do we only provide employer HSA funding for only those who are contributing to their HSA via our company sponsored HSA plan, or should we allow anyone with a company sponsored HSA account to receive the funding--even if they are not regularly contributing?
Administratively, it's been easier to only give those contributing to our company-sponsored HSA account the employer funding because we have record of their account numbers in the payroll system. For those on the HDHP plan who have not set up a company sponsored HSA we are unable to fund their account, which has caused frustration on both ends.
Our largest question is what other companies choose to do with the employer HSA funding and whether it's for everyone regardless of if they contribute to their HSA, or if it's only for those who actively contribute to their HSA I'd say 10-15% of those on our HDHP plan do not contribute to an HSA.
Any input would be very helpful !!
Thanks - Cody
We make an employer contribution to the HSA for everyone on the HDHP. We put in $500 for single plan, $1,250 for couples, children, or family plan on January 2 of each year. We then pro-rate for new hires based on number of months on the plan. Only ones we cannot fund is if they are over age 65 and on Medicare.
We offer two different plans that provide either a $1000 or $2000 Employer contribution to every employee who 1)enrolls in a health plan and 2)participates in our wellness program. We don't take into consideration whether or not they are contributing.
I work for a bank and we are also an HSA provider. Our system is set up so that employers can make contributions without an account number, if you choose to use our internal system AND, the employee opens an account through us. If the employee then chose to never make a contribution and the account only had the ER contribution in it, then that is all on them. Did you want to allow your employees to open their accounts elsewhere for their contribution? if so, then you would handle it like any pre-tax direct deposit and have them sign an authorization form releasing their account number to you.
Our communication made it plain to employees that their receipt of the HSA funds depended on their opening of an account. We instituted a soft and hard deadline and didn't deviate. And we kept communicating that they will lose their employer funding if their account wasn't open. We set up our accounts so that we funded an initial amount upfront, then split the rest of the money into equal payments the rest of the year through payroll. Everyone did end up opening an account so they were eligible for their dollars.
This year, we tied our wellness plan to our HSA funding so only if an individual participated, would they get HSA funds from Liberty. it's not results based, but participation based.
If you have any further questions, I can be reached at 937-234-4247 or firstname.lastname@example.org
Great question. Our ERISA attorneys have confirmed that it could be deemed discriminatory to limit employer HRA contributions to only those who are making contributions. We advise our clients to treat all employees the same with making employer contributions, with the exception of those who are ineligible (e.g,. Medicare participants).
Feel free to call me at 513-703-8837 if you want to discuss further.