HSA Eligibility Question

[Full Throttle]

Situation: S-corp wants to move from a co-pay to a HDHP with the business offering an HRA for the employees. Because of the business being set-up as an S-corp, the business owner is not eligible for the HRA. Is there any reason the owner couldn't utilize an HSA since the plan is a HDHP and the owner isn't eligible for the HRA reimbursement?



P.S. I understand the business can't outright make the contribution to the HSA and have it not show up as income for the owner, if appropriate, the owner would simply fund the HSA out of her personal check book and take a deduction on her 1040.

 

[ABC]

Situation: S-corp wants to move from a co-pay to a HDHP with the business offering an HRA for the employees. Because of the business being set-up as an S-corp, the business owner is not eligible for the HRA. Is there any reason the owner couldn't utilize an HSA since the plan is a HDHP and the owner isn't eligible for the HRA reimbursement?



P.S. I understand the business can't outright make the contribution to the HSA and have it not show up as income for the owner, if appropriate, the owner would simply fund the HSA out of her personal check book and take a deduction on her 1040.

I don't see why you could not do this as long as the plan design is qualified for HSA. Alot of time HRA plans have co pays for prescriptions. If that is the case then you will have to look at a dual option plan or a classification plan.

You are also correct that any contribution to the owners HSA account will be considered taxable income and he/she will have to tax the tax write off on the personal side.

 

[Full Throttle]

Thanks for responding, it is a HDHP by definition and would qualify for an HSA for all employees if an HRA weren't being used instead as a first dollar benefit.

 

[ABC]

I don't understand
So are you saying that since an HRA is being offered the owner can not take out an HSA even though the plan is a qualified HDHP?

If this is the case what about designing a plan with a classification.

So owners/directors have the HSA option and the employees have the HRA plan.

 

[johndale]

Any new updates about this Full Throttle? I'm just wondering if what happened to HRA?