General Questions

  1. What is a Health Savings Account (“HSA”)?
  2. Who is eligible for a Health Savings Account?
  3. How much can I contribute to a Health Savings Account?
  4. How to upload a contribution file through File Safe?
  5. Does an employer have to make contributions to an employee’s HSA?
  6. Is the employer responsible for reviewing medical expenses?
  7. What does an employer need to do if they want to add new employees or terminate an employee from their group?
  8. Do employees need to complete MyHSA enrollment forms every year at open enrollment?
  9. What are the employer’s options if an employer contribute to an employee’s HSA account in error?
  10. Are there any reports available to employers that will help them see how their HSA program is working?
  11. How does Medicare impact an employee’s participation in an HSA?
  12. How long does the employee enrollment process take?
  13. When can my employees expect to receive their MyHSA Debit Card and Welcome Kit?
  14. When reviewing their HSA, can employees tell the difference between their own contribution and employer contributions?
  15. Will employees receive a statement?


General Questions


What is a Health Savings Account (“HSA”)?

An HSA, or Health Savings Account, is a tax-favored savings account used to pay for qualified medical expenses of the account holder, the account holder’s spouse and any eligible dependents tax free. An HSA is not a Use-It-Or-Lose-It type of account it is a Use-It-Or-Keep-It account. The money not spent in the HSA account by the end of the year stays in an the HSA account and the account holder continues to have access to those funds to pay for future qualified medical expenses tax free. With an HSA, over time account holders have the opportunity to accumulate large balances that they can take with them into retirement to use to pay for their retiree medical expenses tax free.

An HSA is an individually owned account, it can never be a “joint account”. However the HSA account holder can use the money in their account to pay for their own qualified medical expenses and the qualified medical expenses of their spouse and any eligible dependents tax free.


Who is eligible for a Health Savings Account?

To be eligible for a Health Savings Account, an individual must be covered by an HSA Qualified Health Plan, and must not be covered by other health insurance (does not apply to specific injury insurance and accident, disability, dental care, vision care, long-term care) that is not HSA qualified, you can not be enrolled in Medicare, and you can’t be claimed as a dependent on someone else’s tax return.


How much can I contribute to a Health Savings Account?

2016 2017

$3,350

Individuals

$3,400

Individuals

$6,750

Families

$6,750

Families

$1,000

Catch-up (age 55+)

$1,000

Catch-up (age 55+)


How to upload a contribution file through File Safe?

Click here to open File Drop Instruction (pdf)

Does an employer have to make contributions to an employee’s HSA?

No, employers are under no obligation to make any contributions to their employee’s HSAs. However to get better participation from your employees in the HSA Qualified Health Plan and to encourage employees to open HSA accounts to start saving for their future an employer contribution is recommended.


Is the employer responsible for reviewing medical expenses?

No, the employer is not responsible for policing the employee’s HSAs. It’s the individual account holders responsible to determining that their account funds are being properly used and the account holder would be required to provide supporting evidence on the use of their funds if requested under IRS audit.


What does an employer need to do if they want to add new employees or terminate an employee from their group?

To add a new employee to the MyHSA program just have the new employee fill out a MyHSA application and then upload the application to File Safe. For employees terminating from your group please contact your MyHSA account manager by email of phone to and let them know who is terminating.


Do employees need to complete MyHSA enrollment forms every year at open enrollment?

No, once an employee has opened their MyHSA account it will remain open as long as they maintain a balance in their account year after year, employees do not have to reenroll every year. If an employee had a MyHSA account in the past and they had closed their account then that employee would need to send in a new application to reopen their account.


What are the employer’s options if an employer contribute to an employee’s HSA account in error?

From IRS Notice 2008-59 regarding employer HSA contributions (Q&A 23, 24 & 25).

Q-23. If an employer contributes to the account of an employee who was never an eligible individual, can the employer recoup the amounts?

A-23. If the employee was never an eligible individual under § 223(c)(1), then no HSA ever existed and the employer may correct the error. At the employer’s option, the employer may request that the financial institution return the amounts to the employer. However, if the employer does not recover the amounts by the end of the taxable year, then the amounts must be included as gross income and wages on the employee’s Form W-2 for the year during which the employer made the contributions.

Example 1. In February 2008, Employer L contributed $500 to an account of Employee M, reasonably believing the account to be an HSA. In July 2008, Employer L first learned that Employee M’s account is not an HSA because Employee M has never been an eligible individual under § 223(c).

Employer L may request that the financial institution holding Employee M’s account return the balance of the account ($500 plus earnings less administration fees directly paid from the account) to Employer L. If Employer L does not receive the balance of the account, Employer L must include the amounts in Employee M’s gross income and wages on his Form W-2 for 2008.

Example 2. The same facts as Example 1, except Employer L first discovers the mistake in July 2009. Employer L issues a corrected 2008 Form W-2 for Employee M, and Employee M files an amended federal income tax return for 2008.

Q-24. If an employer contributes amounts to an employee’s HSA that exceed the maximum annual contribution allowed in § 223(b) due to an error, can the employer recoup the excess amounts?

A-24. If the employer contributes amounts to an employee’s HSA that exceed the maximum annual contribution allowed in § 223(b) due to an error, the employer may correct the error. In that case, at the employer’s option, the employer may request that the financial institution return the excess amounts to the employer. Alternatively, if the employer does not recover the amounts, then the amounts must be included as gross income and wages on the employee’s Form W-2 for the year during which the employer made contributions. If, however, amounts contributed are less than or equal to the maximum annual contribution allowed in § 223(b), the employer may not recoup any amount from the employee’s HSA.

Q-25. If an employer contributes to the HSA of an employee who ceases to be an eligible individual during a year, can the employer recoup amounts that the employer contributed after the employee ceased to be an eligible individual?

A-25. No. Employers generally cannot recoup amounts from an HSA other than as discussed above in Q&A-23 and Q&A-24. See Notice 2004-50, Q&A-82.

Example. Employee N was an eligible individual on January 1, 2008. On April 1, 2008, Employee N is no longer an eligible individual because Employee N’s spouse enrolled in a general purpose health FSA that covers all family members. Employee N first realizes that he is no longer eligible on July 17, 2008, at which time Employee N informs Employer O to cease HSA contributions.

Employer O’s contributions into Employee N’s HSA between April 1, 2008 and July 17, 2008 cannot be recouped by Employer O because Employee N has a nonforfeitable interest in his HSA. Employee N is responsible for determining if the contributions exceed the maximum annual contribution limit in § 223(b), and for withdrawing the excess contribution and the income attributable to the excess contribution and including both in gross income.


Are there any reports available to employers that will help them see how their HSA program is working?

Yes, there are four reports that are sent to employers on a monthly basis that will give them information to help them see how their HSA program is working. Employer’s will receive:

  1. List of Active Employees with a MyHSA accounts report
  2. Account Balance by Tiers Summary report
  3. Year to Date Contribution processed report
  4. Distribution Summary report

How does Medicare impact an employee’s participation in an HSA?

What happens to an HSA when an account holder turns 65?
First, and most importantly, the account remains an HSA and the funds in the account can continue to grow tax free and any distributions for qualified medical expenses come out tax free.

Once the HSA account holder turns 65 they can use the money in their HSA to reimburse their own Medicare or qualifying retiree health insurance premiums tax free. They can also reimburse these premiums tax free for their spouse or disabled tax dependent, however they cannot make tax free distributions to reimburse anyone’s (their own, their spouses or a disabled tax-dependent’s) Medicare premiums until the HSA account holder turn age 65.

Can an account holder who is 65 or older contribute to an HSA?
If an account holder remains an otherwise eligible individual then yes, they can contribute to an HSA. Just turning 65 (or older) does not determine whether or not someone can contribute to an HSA. The most important question is has the HSA account holder enrolled in any Part of Medicare. Once an account holder enrolls in Medicare they are no longer eligible to contribute to an HSA.

What happens when an account holder enrolls in Medicare?
Once you enroll in any Part of Medicare you are no longer eligible to open or contribute to an HSA. The account holder can continue to spend the money in their HSA tax free on qualified medical expenses for themselves, their spouse and any eligible dependents they have.

How long does the employee enrollment process take?

  • Paper Applications: Generally enrolled with in two business days after receiving.
  • Online Enrollment: Typically takes one business after it has been completed and submitted.

When can my employees expect to receive their MyHSA Debit Card and Welcome Kit?

Employee MyHSA Debit Cards and Welcome Kits typically take 7 to 10 business days to get mailed out after the MyHSA account has been opened.


When reviewing their HSA, can employees tell the difference between their own contribution and employer contributions?

If employer and employee contributions are properly coded on your MyHSA contribution spreadsheet has employer and employee contribution it will show on the participant’s statement. If not sent to Alliance Benefit Group with it broke out they will not show on participants statement.


Will employees receive a statement?

Yes, a Year to Date MyHSA statement will be mailed out quarterly to the address we have for each employee. Employees can login to their online account and create a statement on demand whenever they would like.


About MyHSA

MyHSA is a different kind of HSA, it’s a better HSA. MyHSA is designed for the long term while making it easy for you to access your money to pay for medical expenses that you have today. (More)

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