HSA rules decide who can contribute and what the money can do.
Section 223 of the tax code sets the tax treatment for health savings accounts paired with qualifying high-deductible health plans.
The Basics for Employers.
A plain-English summary. This is general information, not legal advice, and the rules change, so check the current text.
Who Is Eligible
A person must be covered by a qualifying high-deductible health plan and generally cannot have other disqualifying coverage or be enrolled in Medicare.
Contribution Limits
The IRS sets annual limits, with a higher limit for people 55 and older, and they change from year to year.
Tax Treatment
Contributions, growth and withdrawals for qualified medical expenses are tax-advantaged, and the account belongs to the employee.
How it plays out.
A health savings account is a tax-advantaged account for people covered by a qualifying high-deductible health plan. Contributions go in tax-free, grow tax-free and come out tax-free for qualified medical expenses.
The rules that trip employers up are eligibility and limits. An employee generally cannot contribute if they have other disqualifying coverage, including most general-purpose health FSAs and Medicare enrollment. Annual limits are set by the IRS each year and are higher for people 55 and older.
Employer contributions have to follow comparability rules when made outside a cafeteria plan, so that similar employees get similar amounts. Running contributions through a cafeteria plan changes the testing rules.
Where This Shows Up in Your Plan.
ERISA, ACA Reporting and Form 5500 Support
How we help with the filings, notices and plan documents.
Employer Benefits Guides: Eligibility, Plan Design, Life Events and Rules
Eligibility, plan design and life-event rules in one place.
Setting up HSAs.
Confirm the Health Plan
Check that the plan qualifies as high-deductible.
Check Other Coverage
Ask about spouse FSAs, Medicare and other coverage.
Set Contribution Rules
Decide how employer contributions are made and tested.
Track Annual Limits
Update the limits each year.
Mistakes to avoid.
Pairing With a General FSA
That can make the employee ineligible.
Contributing After Medicare
Contributions after enrollment are not allowed.
Uneven Employer Amounts
Similar employees generally need similar contributions.
Other Rules Employers Work With.
Laws and Rules Referenced
Health Savings Accounts (26 U.S.C. 223) — The statute or rule text from its official or public source.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential — needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics — tell us which pages get read, so we know what is worth writing more of.
- Advertising — set by third parties such as ad and social platforms to measure and target campaigns.