HSA FAQs for Employers

For even more HSA questions and answers, take a look at the Consumer FAQ!

Can I get HSA contributions the company makes back from employees, like if they leave the company?

Nope. Once you make an HSA contribution, that money is owned by the employee. No refunds allowed.

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So, what happens if an employee leaves the company?

If an employee leaves your company for any reason, they take their HSA with them and all the money in it, regardless of who put the money in there. Remember, HSAs are fully owned by employees—making them completely portable.

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Is it my job to determine the HSA eligibility of my employees?

Your only responsibility in providing an HSA-based health plan for your employees is to determine whether an employee is covered by your qualified HDHP no other conflicting employer-sponsored coverage.

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Should I advise my employees on how to use their HSA money?

Since HSAs are individual, employee-owned accounts, it’s their job to ultimately make their own decisions about account usage—making your involvement a very delicate subject. At the very worst, excessive involvement could lead to liability concerns. With this in mind, we suggest simply encouraging your employees to view third-party resources and education. And (here’s our shameless plug…) you should let them know about the great resources and content they’ll find here at HSAeducator.com!

Also, check out www.FontisHealth.com—they offer a complete education platform that helps you teach your employees how an HSA works and how to be a better healthcare consumer. They even provide a unique HSA health and wellness program that gives employees incentives for getting healthy.

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Can I put rules in place that keep employees from using their HSA money for non-medical expenses?

Good question. As our Consumer FAQ answers, employees can technically use their HSA money for anything—even non-medical expenses. However, any money used for non-medical expenses is subject to full taxation as well as a hefty 10% penalty tax.

Placing additional rules on HSAs through your benefit plan is, simply, a bad idea—it triggers ERISA requirements that your HR department very likely can’t cover (and certainly won’t want to). We recommend you let the IRS’s penalty discourage employees from using their HSA for non-eligible expenses.

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Does COBRA apply to HSAs?

COBRA doesn’t apply to HSAs, but—if you’re company is subject to COBRA—you will have to offer COBRA continuation coverage for your high-deductible health plan.

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My company offers a Health Reimbursement Arrangement (HRA) as a benefit. Does participating in this make employee ineligible for HSAs?

This depends on how the HRA is set-up. Employees can participate in an HRA and an HSA if:

The Health Reimbursement Arrangement (HRA) is limited to dental, vision, or preventive care.
The HRA is set up to pay for medical expenses after employees meet a deductible, which is equal to or greater than the IRS’s requirement for that of a qualified high deductible health plan. In essence, the HRA acts just like a self-funded high-deductible health plan.

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Can we offer a Flexible Spending Account (FSA) in addition to our HSA?

Well, sure—you can offer it. You can offer any combination of benefits. That’s your prerogative.

However, an employee can’t have an HSA if they also have a traditional FSA, as the IRS sees this as double-dipping in the tax-benefit salsa. There is an exception, however: you can offer what’s known as a limited FSA. A limited FSA covers only dental, vision, and preventative care expenses. Additionally, you can also offer an FSA that only kicks in after employees have met their HDHP deductible.

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What other kinds of coverage can we offer our employees that won’t affect HSA eligibility?

There are certain kinds of “limited” insurance coverage that will not affect HSA-eligibility, including:

Dental coverage
Vision coverage
Long-term care coverage
Accident coverage
Disability coverage
Insurance for a specific disease or illness (such as cancer insurance)
Hospital indemnity insurance

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We offer a disease management program. Will that affect HSA eligibility?

No, as long as the disease management program doesn’t provide significant medical care or treatment benefits beyond screenings or preventive services.

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For even more HSA questions and answers, take a look at the Consumer FAQ!

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HSA FAQs for Employers

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