October 8, 2009

HSA Comparability Rules Clarified

Final regulations were issued relating to employer comparable contributions to health savings accounts (HSAs).  These rules basically follow the proposed regulations issued in 2008. 

As background, the comparability rules apply to employer contributions made to the HSA investment account, outside the terms of a cafeteria plan.  The comparability rules do not apply to employer contributions made through the cafeteria plan, nor do they apply to plans subject to collective bargaining agreements.  For a summary of the HSA comparability rules, see prior Benefit Beat articles:

  1. HSA Comparability Rules - Finalized (5/12/08) 
  2. HSA Guidance Again: Comparability Rules Re-Visited (6/7/07)
  3. HSA Guidance Again! Comparability Rules  (9/6/06)

A couple of points to note about the final regulations:

  • These rules provide an employer can contribute a pro-rated amount for a mid-year participant, as long as the employer treats all mid-year participants comparably.  If the employer provides a greater than pro-rated contribution, the employer would have to make a proportionate contribution to any other mid-year participant.
  • The final regulations affirm the ability to contribute higher amounts to non-highly compensated individuals, than to highly compensated individuals.
  • The regulations provide that the excise tax for excess contributions must be filed on Form 8928, ‘‘Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code ”. This Form is due by the April 15th following the calendar year in which the noncomparable contributions were made.

Effective Date.  The sections of the final regulations relating to comparable contributions to HSAs apply to employer contributions made on or after January 1, 2010.  The section of the regulations that relates to the excise tax applies to any Form 8928 that is due on or after January 1, 2010.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service

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