HSA's and Overage Dependents

[MARYMM]

My state is the 2nd or 3rd to do this. Unmarried dependents up to age 26 are eligible to be covered whether or not they are students or reside with you.

For state income tax purposes, coverage of a overage dependent (or a civil union or same-sex marriage partner) has no tax effect. For Federal tax purposes, we need to impute income to the employee for the cost/value of the coverage for the inelgible dependent, withhold taxes and not use the Section 125 Plan for payroll deductions for the coverage. That much we've figured out.

What we can't get a definitive answer to is whether that overage dependent can/should be covered under an HDHP/HSA plan . The HSA component is the problem since we contribute most of the deductible ($1500 single, $3000 family) to each employee's HSA.

If we have an employee with single HDHP/HSA coverage who adds an "overage" dependent, can/should we contribute $1500 or $3000 to the HSA ? The employee shouldn't use the HSA funds for that overage dependent, but the ee owns and controls that account, not us. There is no TPA to adjudicate claims.

If the employee already has family coverage, we still need to impute income for the cost of coverage for the federally inelgible dependent, but the HSA funding question goes away. The employee assumes the risk if they use the HSA funds to pay for pre-deductible expenses of the dependent.

Is it actually a company policy issue ? Should our policy be that our contribution to the HSA is based on the number of federally eligible dependents ?