Jeff Kirtner Posted November 1, 2018 Posted November 1, 2018 Employer wants to offer a MEC/skinny plan to get out of the "A" penalty, and make HSA contributions through a cafeteria plan to employees who get individual HDHP coverage on the exchange. Questions: 1. Does a skinny plan disqualify the individual from making HSA contributions (assume it's the minimum MEC to get out of the "A" penalty)? 2. If not, can the employer make HSA contributions through a cafeteria plan for employees who have HDHP coverage through the exchange? Would this violate any EPP rule (Notice 2013-54 et al) or other rule?
leevena Posted November 2, 2018 Posted November 2, 2018 To be eligible for a HSA, the person must have a qualified HDHP. I have never seen a MEC that is also a HDHP, so the answer is they are not eligible for the HSA. I am not familiar with EPP, sorry.
Jeff Kirtner Posted November 2, 2018 Author Posted November 2, 2018 Sorry if I wasn't clear. The employees would get individual HDHP coverage on the exchange. They would also have MEC coverage. My first question is whether the MEC coverage would disqualify them from getting HSA contributions, given their HDHP exchange coverage. As to my second question, an "EPP" is an "Employer Payment Plan" as defined in Notice 2013-54 and subsequent IRS guidance. Simplifying somewhat, under that guidance, a large employer cannot contribute to an HRA, for example, unless the HRA is "integrated" with non-HRA group coverage. An HRA cannot be "integrated" with an individual policy on the exchange. Thus, Notice 2013-54 would prevent the employer from contributing to the HRA of an employee who has individual coverage on the exchange. My question is whether Notice 2013-54 or any other guidance prohibits the employer from using a cafeteria plan to make HSA contributions to an employee who has individual HDHP coverage on the exchange.
spiritrider Posted November 3, 2018 Posted November 3, 2018 IRS Notice 2004-50 Q&A 81, requires that the employee's HDHP to be sponsored by the employer for employers to make contributions. An individually purchased Marketplace plan would not qualify. Q-81. Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee’s maximum annual contribution limit? A-81. Employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions: (1) whether the employee is covered under an HDHP (and the deductible) or low deductible health plan or plans (including health FSAs and HRAs) sponsored by that employer; and (2) the employee's age (for catch- up contributions). The employer may rely on the employee's representation as to his or her date of birth.
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