BHarrison

Thanks Chaz, From what you said it is allowed but not required by law. The cafeteria plan would determine if it is allowed or not.

We have a former employer whose severance package includes payments over several years and health insurance. The employee has a HDHP and no other health insurance. Can they make HSA contributions through payroll deductions from their severance payments? We are making all of the payroll tax withholding and basically treating the severance payments like wages except they are not for services rendered, so they are not eligible for our 401K plan.