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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The IRS has issued final regulations clarifying the comparability rules for employer contributions to Health Savings Accounts (HSAs). The final regulations adopt the provisions of the proposed regulations with certain modifications. The final regulations are effective on July 31, 2006, and will apply to employer contributions to HSAs made on or after January 1, 2007.
HSAs are accounts that work in tandem with a high-deductible health plan (HDHP). An employer is not required to make contributions to employee HSAs. However, if the employer does contribute to any employee's HSA, the employer must make comparable contributions to all comparable participating employee HSAs. Comparable participating employees are eligible individuals within the same category of employees who have the same category of HDHP coverage. Code Sec. 4980G imposes an excise tax on employers who fail to make comparable contributions to employee HSAs. The tax is 35 percent of the aggregate employer contributions to employee HSAs for the calendar year.
Under the final regulations, employer contributions are comparable if they are either (1) the same amount or (2) the same percentage of the employee's deductible, for employees within the same category of coverage. Under the proposed regulations there were only two categories of HDHP coverage: self and family. However, the final regulations provide for four categories of coverage: self; self plus one; self plus two; and self plus three or more. In addition, the final regulations provide that an employer's contribution to the self plus two category may not be less than its contribution to the self plus one category. Similarly, the employer's contribution to the self plus three or more category may not be less than its contribution to the self plus two category.
The final regulations adopt the proposed regulations' exclusive categories of employees for comparability testing. The categories are:
current full-time employees,
current part-time employees, and
former employees (except for former employees with coverage under the employer's HDHP because of an election under a COBRA continuation provision).
The comparability rules apply separately to each of the categories of employees. If an employer contributes to the HSA of any employee in a category of employees, the employer must make comparable contributions to the HSAs of all comparable participating employees within that category. As a result, the comparability rules apply to a category of employees only if an employer contributes to the HSA of any employee within the category. For example, full-time eligible employees with self-only HDHP coverage and part-time eligible employees with self-only HDHP coverage are separate categories of employees and different amounts can be contributed to the HSAs for each of these categories.
The final regulations clarify that employees who are included in a unit of employees covered by a bona fide collective bargaining agreement are not comparable participating employees if health benefits were the subject of good faith bargaining between employee representatives and one or more employers.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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