Employers Learning Center

No, you do not own your employees’ HSAs. The employee fully owns the contributions to the account as soon as they are deposited, just as with a personal checking or savings account to which you would deposit their compensation.

Employee contributions can be made to HSAs on either after-tax or pre-tax basis. If made on an after-tax basis they should be counted as an above-the-line deduction on their tax return. If they want to make the contribution pre-tax it can be done through a Section 125 via payroll deduction (also called a “salary reduction” or “cafeteria plan”).

As much or as little as you want (while staying below the legal limit as set by the IRS). Click here to view the current IRS Indexed Amounts

No, you can contribute in a lump sum or in any amounts or frequency you wish. However, keep in mind that the funds belong to the employee after they are deposited.

Employer contributions outside of a Section 125 plan must be “comparable”, that is they must be in the same dollar amount or same percentage of the employee’s deductible for all employees in the same “class”. You can vary the level of contributions for “full-time” vs. “part-time” employees, and employees with “self-only” coverage vs. “family coverage”. You do not need to consider employees who do not have HDHP coverage as they are not eligible for HSA contributions.

Section 125 plans (also known as “salary reduction” or “cafeteria” plans) must meet a different set of rules. Under these plans, contributions (both from employer and/or employee) must meet “non-discrimination” rules. These rules require the employer to ensure that contributions do not favor higher compensated employees.

Yes, but your company can only offer “matching” contributions through a Section 125 plan. Remember that the non-discrimination rules still apply.

Your company can make tax free contributions to your employees’ HSAs as long as you do so for all eligible employees. If you do not have a Section 125 plan, the comparability rules apply. If you have a Section 125 plan, then the non-discrimination rules apply.

More than 2% owners of a Subchapter S corporation cannot make pre-tax contributions to their HSAs through the company by salary reduction. In addition, any contributions made to their HSAs by the corporation are taxable as income. However, they can make their own personal contributions to their HSAs and take the “above-the-line” deduction on their personal income taxes.

Rules of attribution apply to more than 2% owners of an S corporation, therefore the more than 2% owner’s spouse, parents, children and grandchildren may not contribute to an HSA on a pre-tax basis. However, they may contribute on a post-tax basis and deduct the contribution at the end of the year on their personal tax return.

Partners in a partnership or LLC cannot make pre-tax contributions to their HSAs through the partnership by salary reduction. However, they can make their own personal contributions to their HSAs and take the “above-the-line” deduction on their personal income taxes.

No. Self-employed persons may not contribute to an HSA on a pre-tax basis. However, they may contribute to an HSA with after-tax dollars and take the “above-the-line” deduction.

You may help your employees establish a FlexBank HSA at the same time, or shortly after they become covered by an HSA-eligible high deductible health plan (HDHP). You should provide each interested employee with a FlexBank HSA Sign Up Kit. At the same time, we strongly urge you to encourage employees to read and fully understand all IRS rules and regulations concerning HSAs as the HSA owner is personally responsible for knowing and abiding by these rules and any adverse tax consequences resulting from misuse of the account.

FlexBank can assist you in initially establishing the account. FlexBank has provided this web site as a central means of knowing the rules along with links to various other web sites where information is available. FlexBank also has a toll-free customer service call center (1-888-677-8373) that you and your employees may call with any questions concerning HSAs.

No, they must establish their HSA with an approved institution.

“Joint” HSA accounts are not permitted. Each spouse should consider establishing an account in their own name. This allows you to both make catch-up contributions when each spouse is 55 or older.

If both husband and wife are eligible to contribute to an HSA, they are both eligible to establish separate HSAs. However, if both spouses want to make “catch-up” contributions when they are age 55 or older, they must establish separate accounts.

Your account can be established as early as the effective date of your HDHP coverage. However, if your coverage begins on any day other than the first day of the month, you cannot establish your HSA until the first day of the following month.

You can complete all the paperwork prior to the effective date of your HDHP coverage. However, your account is not officially “established” until your HDHP coverage begins and a deposit is made into the account.

It is generally the goal to have funds in the HSA on the day that the HDHP is effective. This can be a challenge if January 1 is a weekend/bank holiday. If the HDHP is effective January 1, you are not permitted to make an HSA deposit in the prior calendar year. Here’s why. The custodial bank generates IRS reporting based on a calendar year. A deposit made in the prior calendar year will generate a Form 5498-SA showing that deposits had been made attributable to that calendar year. The issue is that the individual was not technically HSA-eligible until the next calendar year. This may cause a red flag with the IRS. We want to avoid that; therefore if your HDHP is effective January 1, the first date available for a deposit into the health savings accounts will be no earlier than January 2nd. Please contact FlexBank’s HSA team to discuss the timing when using our online HSA depositing system.