HSA Comparability Rules

Increasingly, employers are offering their employees the opportunity to open Health Savings Accounts and save money for medical expenses.
Employers have no obligation to contribute to the account, but once they do, they must abide by U.S. Department of the Treasury comparability rules. Those rules dictate that an employer who contributes to one employee's HSA must make comparable contributions to the HSAs of all comparable employees.
Employers failing to do so face an excise tax of 35 percent of the total amount contributed by the employer to the HSAs of all employees during that calendar year, according to the IRS.

Comparable Contributions

The IRS considers contributions comparable if they are either the same amount or the same percentage of the annual deductible limit.

Comparable Employees

Comparable employees are those who are in the same employment category (current, full-time or former) who have the same category of coverage, such as individual or family.

Cafeteria Exception

HSA contributions made through a cafeteria plan are exempt from comparability rules, according to the Treasury Department. According to the industry newsletter "Consumer Driven Healthcare," most large employers take this approach and therefore don't have to worry about the comparability rules.

Accelerated Contributions

Employers generally contribute to an HSA monthly or quarterly rather than in a lump sum. An employer is allowed to accelerate annual contributions for employees with qualified medical expenses that exceed the employer's annual HSA contribution up to that date.
For this to meet comparability requirements, the employer must make the arrangement available to all eligible employees, according to IRS Bulletin 2008-20: "If an employer accelerates contributions to the HSA of any such eligible employee, all accelerated contributions must be available throughout the calendar year on an equal and uniform basis to all such eligible employees. Employers must establish reasonable uniform methods and requirements for accelerated contributions and the determination of medical expenses."

Highly Compensated Employee

Treasury Department rules include an exception that lets employers contribute more to the HSAs of "non-highly compensated" employees than to the HSAs of "highly compensated" ones. For 2010, a "highly compensated" employee has five percent ownership in the company or earned more than $110,000 in 2009.

Notice Requirement

If eligible employees have not established an HSA by the end of the year (or have one but failed to tell the employer), the employer must take another step to remain in compliance. The employer must, according to the IRS, provide written notice stating "that each eligible employee who, by the last day of February, establishes an HSA and notifies you that they have established an HSA will receive a comparable contribution to the HSA for the prior year." Those contributions must be made by April 15.