HSA Requirements for Employers

The pace of Health Savings Account (HSA) formation has picked up. A survey by the industry group “America’s Health Insurance Plans” (AHIP) found 28 percent of the nearly 400,000 HSAs in existence at the end of 2012 were established that same year. In fact, the number of total accounts had nearly doubled from just two years prior. What are HSA contributions and what are the HSA requirements for employers?

HSA contributions, which can be made both by employees and employers, are tax deductible, earnings on saved amounts are also not taxed, nor are the funds taxed when withdrawn to pay for eligible medical expenses, including long-term care insurance premiums, COBRA payments, and health insurance premiums when individuals are collecting unemployment compensation.

HSAs have grown in use partly because of the increased popularity of high-deductible health plans, which must exist before an HSA can be established. For some employers, HSAs are akin to a mere bonus on top of the benefits of high-deductible plans. Review the requirements below to see if you are able to offer an HSA to your employees.

HSA Requirements

In order for you and your employees to have a health savings account, it needs to be incorporated into a high-deductible health plan. Specifically, the health plan in 2014 must:

• Have a deductible of at least $1,250 for single coverage and $2,500 for family coverage,
• An out-of-pocket spending cap of $6,350 for individual coverage and $12,700 for family coverage, and
• Offer certain preventive services covered in full by the plan and not subject to the deductible.

Keep in mind that some of these limits are tied to inflation.

In addition, employees cannot be covered by any other health plan (for example, a spouse’s plan), although they can have supplemental ancillary coverage for vision, dental, specific diseases and insurance that provides a fixed cash benefit for hospital stays.

For 2015 the HSA figures are modified for inflation:

• Have a deductible of at least $1,300 for single coverage and $2,600 for family coverage,
• An out-of-pocket spending cap of $6,450 for individual coverage and $12,900 for family coverage, and
• Offer certain preventive services covered in full by the plan and not subject to the deductible.

Please contact GTM’s Insurance Experts for more information.