Frequently Asked HSA Questions For Employers:

Since health savings account came into existence in 2004, many employers have been scrambling for more information on these accounts and how they work. Most employers are now offering group health insurance for their employees, but due to HSA restrictions, you may need to change your plan for your employees to get the full benefit of their health savings account.

Here are some frequently asked HSA questions and answers for employers.

Who "owns" the health savings account? The money that is in a health savings account belongs to the individual who has opened it. This means that even if you, as an employer contribute money to the account, the money then belongs to the employee, even if they leave your employ.

What is an HSA eligible health plan? In order for a health insurance plan to be HSA eligible, it must have a deductible that is higher than $1000 per year. Many group plans do not fit these requirements. In addition, co-pay insurance plans are not HSA eligible, further complicating the issue. If your current group health plan is not HSA eligible and you have several employees who wish to use their HSA to pay for their insurance and medical expenses, this may mean that you will need to shop for a new plan. If you do not wish to do so, your employees are free to take out their own insurance policies, but this can complicate the issue if you wish to make contributions to that employee's HSA. We'll cover that question next.

If only one employee has an HSA, can I contribute to it? If you plan to do this for one employee, you must offer the option to all of your employees in order to avoid any discrimination claims. If this employee has not enrolled in your current group health plan, because it is not HSA eligible, you may also offer reimbursement for their premiums, as long as they provide you with an invoice from their insurance company each week. Again, you will need to make this same offer to all of your employees if you plan to do it for one.

Can an employee open their own HSA? Yes, if you do not offer an HSA or your group plan is not HSA eligible, your employee is free to open their own HSA account or find an insurance plan that is HSA eligible.

Do employees have to spend all of their HSA funds within one calendar year? No. Unlike Flexible Spending Accounts or FSA's, the money that is kept within a health savings account will roll over each year. The interest that the money in an HSA has earned will also roll over.

How long can an employee keep their HSA? The money that is in an employee's health savings account is theirs for as long as they live. You will not be able to remove any contributions you have made, and the funds can be transferred to a beneficiary upon the death of your employee. In addition, if your employee leaves your company, the health savings account will go with them.

Who is responsible for paying HSA administrative fees? This will depend on you and your employee's preferences. The administrative fees may be paid by either of you and will not count towards the maximum allowable deposit. There are many different administrative fee schedules for HSA's and some institutions offer low-fee or no-fee plans. It is important to comparison shop before selecting a health savings account administrator.

How much can I contribute to an employee's HSA during one year? The maximum allowable contribution in one year is $2650 for a single person and $5250 for a family. If you plan to match your employee's contributions, or handle them entirely, they must fall under this amount. In addition, this contribution cannot exceed the amount of the insurance plan's deductible. For example, if the deductible is $2000 per year, you would only be able to contribute $2000 per year to your employee's health savings account.

How can I learn more about Health Savings Accounts? Your current group health insurance plan representative should be able to give you more information on your HSA options. If they are not forthcoming with this information, you may need to switch to a different group plan that will meet your needs.

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