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HDHP TPA error, HSA ineligibility correction


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I represent a company that has an HDHP and HSA  for employees. Due to a TPA error, several HDHP and HSA participants who had not yet reached their HDHP deductible were designated as though they had. Because of this designation, said participants began receiving reimbursements from the HDHP. Obviously, this would make said participants ineligible for an HSA since they are being covered by another medical plan before reaching their deductible. Is there a way for the affected participants to pay back the reimbursement monies paid by the HDHP so they could once again become HSA eligible? To further clarify, this has all happened within the 2017 calendar year. 

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Obviously I don't have all the facts but if this is an ERISA plan and through admin error did not properly apply the deductible, I think the plan should notify the individual telling them they are required to make payments back to the plan to true-up to what should have happened. A corollary would be that their HSA eligibility would then not be jeopardized by the error.

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Yes, there is a way.  The TPA needs to re-process the claims to show the correct application of the deductible and patient responsibility via revised EOBs.  The providers won't be happy since it means they will now have to collect the outstanding money from the patients.  Patients won't be happy but should understand that they hadn't really met their deductibles yet.

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Thank you both for your responses, I am wondering if either of you might be able to provide an answer to a follow up question:

Assuming the providers are unable to collect the outstanding money from the participants, my understanding was then that only the affected participants would become HSA ineligible. However, the TPA has suggested that all participants in the HDHP, including those unaffected by the error, will become HSA ineligible since the HDHP is not longer a high deductible plan (because the HDHP made payments before the deductible was met for the select group of affected participants.) Put simply, the TPA believes that the HDHP early payments disqualifies all participants from HSA eligibility, not just the ones who had been paid before meeting their deductible. Is this approach consistent with anything either of you two have read?

Thank you!

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I don't recall any guidance specifically on point. I think the TPA's position is probably based on the notion that the error for the 2 individuals in question effectively shows that the plan did not enforce the HDHP, so no one is eligible. While this is subject to facts and circumstances, my guess is that a review would show that the plan actually was a good HDHP and merely had some isolated errors that do not affect the plan as a whole. I am sure that many other participants have had to pay up to the stated out of pocket before having the deductibles as stated in the plan waived. These are not qualified retirement plans under 401(a), of course, so the requirement of perfection in form and operation does not apply.

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