What Are the Limits of a Group Plan HSA?
Are you an employer that already offers high-deductible health coverage?
Are you thinking about a higher-deductible health plan?
If the answer’s “yes,” you should consider an HSA for your employees.
What is a Group Plan HSA?
Health Savings Accounts (HSAs) reimburse the same eligible expenses as a Health Flexible Spending Account (FSA), but without the dreaded “use it or lose it” consequences when the plan year ends or the participant changes jobs. In addition, interest earned on the HSA accumulates tax-free.
Just think of the jump in participation levels to the cafeteria plan when employees are offered this great new benefit!
What Are the Annual HSA Contribution Limits?
- For single coverage, either the amount of the health plan deductible or up to a maximum of $2,900, whichever is less.
- For family coverage, either the amount of the health plan deductible or up to a maximum of $5,800, whichever is less.
- Individuals age 55-65 can make additional pre-tax “catch-up” contributions of $600 for 2005.
This amount increases until it reaches $1,000 in 2009 and thereafter. Amounts are doubled if the account beneficiary is married and both spouses are over 55 years of age.
6 Need-to-Know Facts About HSA Contributions
- Contributions accumulate tax-free.
- HSA contributions must be coordinated with any MSA contributions. The contribution limitations are decreased by any contributions to an MSA and/or employer contributions to the HSA.
- Employer contributions must be “comparable” (nondiscriminatory) in order to be excludible from the employee’s income. A penalty tax is applied to employers who fail to make employee contributions in a nondiscriminatory manner.
- There are also special rules for employers who make contributions to Archer MSAs and Health Savings Accounts during the calendar year.
- Medicare eligible individuals may not make contributions to an HSA.
- The participant and their employer may both make contributions to one HSA in the same calendar year.
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