What you may not know about HSA's

Employer responsibilities regarding HSAs

Employers offering HSAs do have certain responsibilities for both active employees and post-employment plan participants. This could encompass eligible actives, retirees, leave of absence personnel and COBRA or state continuation participants. Here's a simplified list of what you'll need to do to meet the employer obligations of Health Savings Accounts:

• Make comparable contributions. If you're not utilizing the payroll deferral approach, then you'll need to make a pretax employer contribution and do so on a comparable basis. 
• Offer a Section 125 plan (if offering payroll deferral). If your company offers the pretax payroll deferral, be sure you maintain a Section 125 plan to include collecting employee deferral elections and send the deferred funds to the HSA vendor (administrator). This allows for tax reporting requirements to be carried out.
• Avoid mistakes by communicating eligibility rules and limits. Mistakes on the part of employee or employer can typically be avoided by communicating up front regarding the maximum contribution (limit) and rules regarding eligibility for the HSA plan. The employer needs to ensure that they do not exceed the Federal limits. 
• Get in the details. There are some more in depth rules regarding employer responsibility for HSAs which are too lengthy to list here, and those should not be overlooked so be sure to understand all of the rules for offering HSAs to your employees. Detailed information regarding HSA employer reporting requirements can be found by visiting the IRS HSA web page. 
• Reporting Requirements for Tax Purposes. Employers need to properly complete form W-2 for employees as well as on the employer's tax forms. The HSA employer contributions are typically listed as a benefit under IRC Section 106.

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Benefits of Offering HSA paired with HDHP

There are some advantages for employers offering High Deductible Health Plans (HDHP) combined with HSA (Health Savings Account). An HSA program often offers flexibility as employers can be generous and fully fund the HSA and/or pay for the HDHP coverage. Employers may also choose to reduce their involvement in benefits by placing more responsibility on the employee. 

Consumer driven health care. The school of thought here (or at least that's how it once was) is that the employee (consumer) will be more careful and involved with his or her healthcare purchases if the employee is made to be responsible over the benefit (such as an HSA). The HSA combined with the health plan often increases the employees' desire to utilize the benefits (dollars) because it is their own money and they can keep unused money. 

Reduced premiums. High deductible health plans (keyword HIGH DEDUCTIBLE) are almost always less expensive than regular insurance plans. 

Less administrative responsibility. HSA's being savings accounts in the individual employees' control releases the employer from a great deal of administrative burden and benefits management. The employee in turn has more control over how and when the money is spent. A win, win. 

Employees like HSAs. While not all employees will understand the more complex details of their benefits, savvy employees who are informed of the benefits of having an HSA/HDHP will value this dynamic duo. 

2018 HSA Limits: 

For 2018, taxpayers with family coverage under an HDHP may treat $6,900 as the maximum deductible HSA contribution, up from $6,750 in 2017.

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