HSA Contribution-Distribution Question

[G.Gordon]

Can't find the exact answer I'd like anywhere on IRS or any other HSA info site.

H/W pair on a joint HDHP and they open a joint HSA account. Can the employer contribute to the HSA account for his employee and the money in the account be used to both members of said account?

 

[Justin Bilyj]

this:

Can a husband and wife establish a “joint” HSA if they are covered under a family HDHP plan?
No. HSAs are individually owned; joint accounts are not permitted. You may, however, authorize your spouse to
be a signer on your HSA, with privileges to contribute to and withdraw from the account.
Each spouse is permitted to open an HSA, but the combined contributions to their HSAs may not be more than
the family contribution limit for the year.

https://www.irs.gov/publications/p969/ar02.html

Each spouse who is an eligible individual who wants an HSA must open a separate HSA. You cannot have a joint HSA.

I don't see why you can't use a contribution from an employer to pay for qualified expenses for spouse/dependent on the hdhp..

Q-28. May an HSA account beneficiary authorize someone else to withdraw funds from his or her HSA?

A-28. Yes. Although an HSA is an individual account, an HSA account beneficiary can designate other individuals to withdraw funds pursuant to the procedures of the trustee or custodian of the HSA. Distributions are subject to tax if they are not used to pay for qualified medical expenses for the HSA account beneficiary, the account beneficiary’s spouse, or dependents. See Notice 2004-2, Q&A-25. But see Q&A-34, Q&A-35 and Q&A-36 of this notice regarding prohibited transactions.
https://www.irs.gov/irb/2008-29_IRB/ar11.html

 

[TwoLabs]

So essentially, the account can not be jointly owned, BUT the spouse can use those funds for his/her own medical expenses. Even if the HSA account owner is the one who's employer is contributing, correct?

And taking it further, IF the spouse decided to get his/her own HSA. They still cannot contribute (via whatever means) more than the family HSA contribution.

Am I understanding that correctly?

 

[Justin Bilyj]

So essentially, the account can not be jointly owned, BUT the spouse can use those funds for his/her own medical expenses. Even if the HSA account owner is the one who's employer is contributing, correct?

And taking it further, IF the spouse decided to get his/her own HSA. They still cannot contribute (via whatever means) more than the family HSA contribution.

Am I understanding that correctly?

Yes......................... one thing I didn't know is you can take distributions from a qualified account to contribute to an HSA although it isn't deductible and takes away from the max contribution.
I think it's the smartest way to pay for ltci premiums from qualified money aka deduct contributions, use money tax-free for ltci

 

[G.Gordon]

Thanks, good info.

 

[AEMC]

HSAs

Any money put into the account (from the employer, employee, or any other qualified individual) can be used for the individual that is enrolled in the HDHP and the account was set up for. The money can also be used for any eligible medical expenses for any tax dependents (including spouse) of the account holder, even if they are not currently covered by the HDHP. The spouse can be authorized to use the account, although it will be set up under one individual. HSAs can also be used for dental and vision expenses. Whether a family is one or multiple HSA accounts the aggregate account balances cannot be higher than the annual family contribution of $6,650.

 

[Yagents]

What about the other question about the employer being able to contribute to an employee's HSA account?

Can an employer contribute to one EE's HSA account (if HDHP owned), and NOT contribute to another EE's HSA account (if copay plan owned) without running into discrimination testing? I'm speaking about IFP HSA plans for small employers (not group HSA)

 

[AEMC]

I am unfamiliar with the terminology IFP HSA.

An employer can contribute towards an employee's HSA account. The money is 100% vested at the time of deposit. I would expect ERISA to view an employer contributing towards one employees HSA and not another's would be viewed as discrimination so long as they are a group of similarly situated individuals. If they are different classes of employees then there is potential. In order for anyone (employer or employee) to contribute into a HSA they must be covered by HDHP. If the account holder is no longer enrolled in HDHP they can no longer contribute into the account, however they can spend down the account.

 

[unic.consulting]

What about the other question about the employer being able to contribute to an employee's HSA account?

Can an employer contribute to one EE's HSA account (if HDHP owned), and NOT contribute to another EE's HSA account (if copay plan owned) without running into discrimination testing? I'm speaking about IFP HSA plans for small employers (not group HSA)

If they have a copay plan, then they wouldn't be eligible for HSA contributions. But I think I understand what you're asking.

As far as I can tell, it would definitely be allowed as part of a cafeteria plan, but not otherwise. The main problem I've come across in researching this is the idea of comparable plans. Is a HDHP plan considered comparable to an HMO or PPO?

 

[Yagents]

I am unfamiliar with the terminology IFP HSA.

An employer can contribute towards an employee's HSA account. The money is 100% vested at the time of deposit. I would expect ERISA to view an employer contributing towards one employees HSA and not another's would be viewed as discrimination so long as they are a group of similarly situated individuals. If they are different classes of employees then there is potential. In order for anyone (employer or employee) to contribute into a HSA they must be covered by HDHP. If the account holder is no longer enrolled in HDHP they can no longer contribute into the account, however they can spend down the account.

IFP = Individual / Family plans (NON Group)
If employee #1 has a HDHP HSA (HMO OR PPO)
employee #2 has a copay plan (non HSA)

How can this employer contribute to EE #1, and not EE #2 , and avoid being discriminatory?

Thanks in advance