Hoosier Banker 39 Employers increasingly are turning to high-deductible health plans for their employee medical coverage. The stated objective is to give employees greater control over their own health benefits and motivate them to be cost-conscious healthcare consumers while also lowering their premiums. HDHPs that meet certain qualifications allow employees to save with health savings accounts on a pretax basis to cover their eligible out-of-pocket medical expenses. Following are questions that employers should be asking before open enrollment approaches later this year. 1. What type of health insurance plans are compatible with an HSA? A health plan is considered an HSA-compatible, or HSA-eligible, HDHP if it satisfies the deductible and out-of-pocket expense requirements shown below. These amounts are subject to annual costof-living adjustments. If the plan uses a network of providers, plan provisions specific to out-of-network services are not taken into account for satisfying the deductible and expense limitations that are required for a plan to be considered HSA-compatible. Instead, only deductibles and out-of-pocket expenses for services within the network should be considered to determine whether the HDHP is HSA-compatible. Employees have eligibility requirements as well, and these are described in IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. 2. Must employers contribute to their employees’ HSAs? Employers are not required to contribute to their employees’ HSAs, but they may contribute on behalf of their employees up to the annual statutory limit, which also is subject to annual COLAs. If they choose to do so, employers generally must make comparable contributions to all comparable participating employees (i.e., eligible individuals with comparable coverage during the same period). Contributions are considered comparable if they are the same amount or the same percentage of the HDHP’s deductible for eligible employees within the same category of coverage (self-only or family). The comparability rules are applied separately to full-time employees, part-time employees (i.e., employees who are typically employed fewer than 30 hours per week), and former employees. IRS Publication 969 provides more details on comparable contributions. Employers that do not comply with the comparability rules during a period are subject to an excise tax of 35% of the aggregate amount the employer contributed to its employees’ HSAs for that period. Employers must file Form 8928, Return of Excise Taxes under Chapter 43 of the Internal Revenue Code, to pay the excise tax. 3. Can employers offer HSAs through their cafeteria plans? Yes. Employers may include both the HDHP and HSA as options through their cafeteria plan, thus allowing employees to pay HDHP premiums and contribute to their HSAs through payroll deduction. These payroll deduction elections must be made prospectively, and employers may use automatic enrollment (negative election) for HSAs offered through a cafeteria plan. Christle Johnson Consultant/Senior Editor Ascensus Christle.Johnson@ Ascensus.com Ascensus is an associate member of the Indiana Bankers Association. Five Important HSA Questions FEATURE Continued on page 40.
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