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HSAs and non-citizens


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Can a non-citizen/non-green card holder living and working in the US (for example, on a visa) contribute to an HSA if he or she has qualifying HDHP coverage in connection with his or her US employment and no disqualifying coverage?

The Code and related IRS guidance state that eligible "individuals" can contribute without any caveat that they be citizens so it appears that non-citizens can do so but I have come across some sort-of-authoritative sources that say the opposite.

Any thoughts are appreciated.

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Consider that, without regard to anything in Internal Revenue Code of 1986 § 223, a banking, insurance, or securities business might choose not to open an account for a non-U.S. person. Among several potential reasons, a business might do so to streamline its procedures or lower its expenses for obeying Federal and State know-your-customer and anti-money-laundering laws.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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On 8/8/2022 at 2:33 PM, Chaz said:

on a visa

Everyone has to have a visa. There are several different types. You mean a tourist visa? If so, I don't think you can even put them on the payroll without violating Federal law.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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Well, theoretically, one could employ someone who is undocumented.  It is my understanding that has been known to happen.

Snark aside, I have many clients who bring non-citizens into the US for a time as expat employees under work visas.  These expats are paid and are able to enroll in benefits the same way as other employees.  A client wondered if there were any legal restrictions on the expats contributing to an HSA (and/or have contributions made on their behalf.

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Chaz, that Internal Revenue Code of 1986 § 223 alone might not preclude a contribution by or for a non-U.S. person might not fully answer an employer’s (or its employee’s) questions.

A Health Savings Account might not be entirely controlled by an ERISA-governed employee-benefit plan for which an employer or a plan administrator decides almost everything. A custodian might make its independent business decisions. Someone might want to find a custodian that will accept the contributions.

Also, an individual might consider not only U.S. Federal, State, and local tax laws but also income and other taxes under the laws of each nation of which the individual is a citizen, has her domicile, is a resident, or otherwise has a connection that could impose a tax. That might include considering treaties between or among nations.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Nothing in the HSA statute requires an individual to be a U.S. citizen to establish and contribute to an HSA. However, non-citizens face two challenges when try to establish an HSA. First, and likely the biggest challenge to overcome, most non-citizens have health care coverage from their home country that would disqualify their HSA eligibility even though they are enrolled in a U.S.-based "HSA-qualified" high deductible health plan. Second, non-citizens may also have issues passing U.S. "Patriot Act" requirements such as the Customer Identification Program (CIP) and Know Your Client (KYC) when attempting to establish a financial account like an HSA.

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Yeah the Patriot Act/USA Freedom Act identity verification issues to establish the account would be the main concern (besides ensuring HDHP enrollment and no disqualifying coverage, as Mr. HSA noted).  Same issues as any bank account.  Forbes has a nice overview here: https://www.forbes.com/advisor/banking/non-us-citizen-open-bank-account/

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