HSA Questions

Submitted by MIKE KRUCHTEN on Wed, 2019-11-20 14:09

I have a client who works for a very large insurance company. She carries a family plan for herself and spouse. The health plan is a HDHP. Her company makes a $1,000 contribution to her and to her spouse into a HRA account, not a HSA!!! I understand the difference between the two but not sure if the $2,000 aggregate contribution made by her employer counts toward the Family max contribution of $9,000 (both are over 50) to HSA as does when the employer makes a HSA contribution. I feel not since the HRA funds are controlled and kept by the employer should she leave employment.



Submitted by David Mertz on Wed, 2019-11-20 14:41

Coverage of the client and her spouse by the HRA generally makes them both *ineligible* to make contributions to HSAs or have HSA contributions made on their behalf.  See “Other employee health plans” on page 4 of IRS Pub 969:  https://www.irs.gov/pub/irs-pdf/p969.pdf

Submitted by MIKE KRUCHTEN on Wed, 2019-11-20 19:51

Have never came across a HRA plan until this plan. Client works for a very large casualty insurance company, shocked they are using an HRA vs. HSA. The more I read about HRA vs. HSA the more it seems employees miss out by not being allowed to max a HSA as a family plan and when both are above age 50. Clients did max a HSA for 2019. What are the logistics to reverse or pull funds for 2019 contribution that isn’t allowed. Bank where HSA was established is clueless how to handle…..

Submitted by David Mertz on Wed, 2019-11-20 21:46

“Excess contributions” beginning on page 7 of Pub 969 describes the penalty for making an excess contribution if not corrected and how to correct the excess contribution by requesting the HSA custodian to make an explicit return of excess contribution distribution, essentially the same way as is done for an excess IRA contribution.  It’s extremely common for individuals to make excess HSA contributions, so it’s unimaginable that an HSA custodian would not have a specific form for making the request.  Perhaps the bank is just fronting for the actual HSA custodian and the HSA custodian needs to be contacted directly.

Submitted by William Tuttle on Wed, 2019-11-20 17:10

Assuming that you do not misunderstand what your employer is providing or it is a typo and not an HSA contribution. An HSA employer contribution is included in the contribution limit and would reduce your contributions to $7,000.

  • However, your post is correct and you have a $2,000 general purpose HRA, you are both ineleigible to make HSA contributions. However, if it is one of the following HRAs you are HSA eligible and it does not reduce your HSA contribution space:
  • Limited Purpose HRA: Can only be used for Dental and Vision Expenses
  • Retiree HRA: Can only be used after retirement
  • Post-deductible HRA. Can only be used after the HSA statutory minimum deductible (2019 = $2700 family HDHP). This is NOT your plan deductible.

Are you sure you are HSA eligible in the first place? Not all health insurance plans with high deductibles are HSA qualifiying HDHPs.

  • P.S. I would find it massively incompentent and very unlikey that an employer would have an HSA qualifiying HDHP and then disqualify all participants by having a general purpose HRA.

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