Labor Department Issues New Guidance on HSAs
The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) recently issued Field Assistance Bulletin (FAB) No. 2006-02 providing new guidance on health savings accounts (HSAs).
Although the requirements for tax-qualified HSAs are found in the Internal Revenue Code, EBSA explains, questions have arisen regarding the application of the Employee Retirement Income Security Act (ERISA) to HSAs because employers may establish and contribute to an employee's HSA. Many issues regarding the status of HSAs under ERISA were addressed in FAB No. 2004-01, which was issued by EBSA in April 2004. However, since then, the Department has received a number of recurring questions about that guidance and about “the evolving practices regarding the offering of HSAs.”
FAB No. 2006-02 is intended to provide further guidance on many of those questions. It addresses the following questions, among others:
- In the absence of an employee's affirmative consent, may an employer open an HSA for an employee and deposit employer funds into the HSA without violating the condition that requires the establishment of an HSA by an employee to be "completely voluntary"?
- Can an employer that maintains a high deductible health plan limit the HSA providers that it allows to market their HSA products in the workplace or select a single HSA provider to which it will forward contributions without making the HSA part of the employer's ERISA-covered group health plan?
- Would an employer be viewed as "making or influencing" the HSA investment decisions of employees merely because it selects an HSA provider that offers some or all of the investment options made available to the employees in their 401(k) plan?
- Can an employer pay the fees associated with the HSA that the employee would normally be expected or required to pay without causing the HSA to become an ERISA-covered plan?
- If the employer limits the number of HSA vendors to which it will forward contributions, may the employer receive a discount on another product from one of the selected HSA vendors?
For links to all EBSA-issued FABs, click here.
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