Unlike many other account-based employee benefits, such as flexible spending accounts, a Health Savings Account belongs to the employee. Employers may offer HSAs as part of a benefits package, but they have no obligation to deposit money into the accounts. Those that do contribute, however, are responsible for following U.S. Department of the Treasury rules and regulations.
Employee Ownership
Recognize that the funds do not belong to the company. A worker with a high-deductible health plan can contribute--or accept contributions--to an HSA. The employer cannot control how the employee uses the funds, according to the Treasury Department. Moreover, the employee owns all the money in the account. If an employer deposits $3,000 into an employee's HSA on Jan. 2 and the employee resigns on Jan. 5, the money and the account stay with the employee.
Contribution Limits
Abide by contributions limits. For 2010, Treasury limited the total contributions to an HSA to $3,050 for those with individual coverage and $6,150 for family coverage.
W-2 Completion
Report the contributions by entering "W" in box 12 of the Form W-2 you file for each employee. Employer contributions to an HSA are generally not subject to employment taxes.
Business Deductions
Deduct HSA contributions on the "employee benefit programs" line of the business income tax return for the year the contributions were made.
Comparability Rules
Follow comparability rules. They dictate that an employer who contributes to one employee's HSA must make comparable contributions to the HSAs of all comparable employees. Comparable contributions are either the same amount of money or the same percentage of the health plan's deductible. Comparable employees generally have the same employment category and the same level of coverage. (The IRS details what constitutes "comparable" in Bulletin 2008-2.)
Violate comparability rules and face a severe penalty: 35 percent of the total amount contributed by the employer to the HSAs of all employees during that calendar year, according to the IRS.
HSA contributions through a cafeteria plan are exempt from comparability rules, according to the Treasury.
Year-End Notice
Notify eligible workers. According to the IRS, if HSA-eligible employees have not established an account by Dec. 31 (or have one but haven't told the employer), the employer must notify them, in writing, that they can open an HSA. The notice must spell out that any eligible employee who establishes an HSA by the last day of February (and informs the employer that she has done so) will receive a comparable contribution to the HSA for the prior year.
Employers must provide notice by Jan. 15 and deposit the money by April 15, according to the IRS.
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