Can employees make HSA contributions if they’re getting VA benefits?
Issue:

You have several employees who are veterans and receiving health care benefits from the Department of Veterans Affairs (VA). How does their receipt of VA benefits affect their eligibility to contribute to your company’s health savings accounts (HSAs)?
Answer:    

The IRS has stated that someone receiving medical benefits from the VA is not disallowed from making HSA contributions if the medical benefits consist solely of:

    (1) disregarded coverage;

    (2) preventive care; or

    (3) hospital care or medical services under any law administered by the VA Secretary for service-connected disability.

The IRS is aware that identifying services provided by the VA specifically for service-connected disabilities is confusing for employers. Therefore, for purposes of administrative simplification with regard to HSA contributions, any hospital care or medical services received from the VA by a veteran who has a disability rating from the VA may effectively be considered to be hospital care or medical services under a law administered by the VA Secretary for service-connected disability.

Source: IRS Notice 2015-87, I.R.B. 2015-52, December 28, 2015.
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