8830 / What rules govern employer contributions to employee HSAs? Must an employer who offers HSAs to its employees contribute the same amount for each employee?

“Comparable contributions” for this purpose are contributions that either are the same amount or the same percentage of the annual deductible limit under a high deductible health plan (HDHP).³ “Comparable participating employees” include all employees who are in the same category of employee and have the same category of coverage.

Category of employee refers to full-time employees, part-time employees, and former employees.⁴ Category of coverage refers to self-only coverage and family-type coverage. Family coverage may be subcategorized as self plus one, self plus two, and self plus three or more. Subcategories of family coverage may be tested separately, but an employer may not contribute less to a category of family coverage with more covered persons than to another category with fewer covered persons.⁵

For years beginning in 2007 and thereafter, participating highly compensated employees may not be treated as comparable to non-highly compensated employees.⁶

Employer contributions made to HSAs through a cafeteria plan, including matching contributions, are not subject to the comparability rules, but are instead subject to IRC Section 125 nondiscrimination rules.⁷

An employer may make contributions to HSAs of all eligible employees either:

(1)  at the beginning of a calendar year;

(2)  monthly, on a pay-as-you-go basis; or

(3)  at the end of a calendar year, taking into account each month that an employee was a comparable participating employee.

An employer must use the same contribution method for all comparable participating employees.⁸

If an employer does not prefund HSA contributions, regulations provide that it may accelerate all or part of its contributions for an entire year to HSAs of employees who incur, during the calendar year, qualified medical expenses exceeding the employer’s cumulative HSA contributions to date. If an employer permits accelerated contributions, the accelerated contributions must be available on a uniform basis to all eligible employees under reasonable requirements.⁹ See Q 8831 for a detailed discussion of the rules that apply when an employee does not participate in the employer’s HSA for the entire year.