Employer Contributions at Open Enrollment but not for New Hires

We have an HSA where we make employer contributions at OE only.  Accordingly, mid-year hires do not get employer contributions during their first year.  I know employers have the ability to set their own contribution intervals (e.g. annually, monthly, etc.), so I think this is alright.  But are there any issues with nondiscrimination or comparability rules?

I don't see this as a concern.  As you noted, employers have discretion to set the HSA contribution interval.  

With respect to the nondiscrimination issue you raised, the comparability rules are essentially a dead letter because they do not apply to employer contributions made through a cafeteria plan. The comparability regulations, cafeteria plan regulations, and other IRS guidance all make clear that employer contributions to an employee’s HSA are made “through a cafeteria plan” where employees may contribute to the HSA on a pre-tax basis through the cafeteria plan by salary reduction.  Therefore, virtually all employer HSA contributions are subject to the §125 cafeteria plan nondiscrimination rules (rather than the §4980G comparability rules) because almost all employers permit employees to make pre-tax HSA contributions through payroll.

It is relatively easy for employers to satisfy the Section 125 nondiscrimination rules.  The primary requirement is that employers satisfy the “uniform election” component of the contributions and benefits test.  This generally requires that employers provide at least as generous HSA contributions for non-highly compensated participants as made available for highly compensated participants.

That "uniform election" test allows employers to categorize employee groups based on whether they are "similarly situated" to permit categories of participants with reasonable differences in plan benefits.  I would consider it fair to treat new hires differently because they are not similarly situated to those who are employed/participating on the one-time HSA contribution date for the plan after OE.

• More discussion: https://www.newfront.com/blog/employer-hsa-contributions

Here's a couple useful cites:

Prop. Treas. Reg. §1.125-7(c)(2):

(2) Benefit availability and benefit election. A cafeteria plan does not discriminate with respect to contributions and benefits if either qualified benefits and total benefits, or employer contributions allocable to statutory nontaxable benefits and employer contributions allocable to total benefits, do not discriminate in favor of highly compensated participants. A cafeteria plan must satisfy this paragraph (c) with respect to both benefit availability and benefit utilization. Thus, a plan must give each similarly situated participant a uniform opportunity to elect qualified benefits, and the actual election of qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect permitted taxable benefits)…A plan must also give each similarly situated participant a uniform election with respect to employer contributions, and the actual election with respect to employer contributions for qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect to receive employer contributions as permitted taxable benefits).

Prop. Treas. Reg. §1.125-7(e)(2):

(2) Similarly situated. In determining which participants are similarly situated, reasonable differences in plan benefits may be taken into account (for example, variations in plan benefits offered to employees working in different geographical locations or to employees with family coverage versus employee-only coverage).

Thank you very much, Brian, for the quick and detailed answer!