Labor’s Field Assistance Bulletin (FAB 2006-02) clarifies a 2004 bulletin that addressed the coverage of HSAs under the Employee Retirement Income Security Act (ERISA).
The new guidance comes in the form of 11 questions and answers that address many pending issues relating to HSA contributions and tax treatment. Specific queries include employee consent, “making or influencing” HSA investment decisions of employees, and contributions made through a cafeteria plan.
Here are some sample pointers:
Q: If the employer limits the number of HSA vendors to which it will forward contributions, may the employer receive a discount on another product from one of the selected HSA vendors?
A: No. In Labor’s view, receiving a discount on another product from an HSA vendor selected by the employer would constitute the employer receiving a “payment” or “compensation” in connection with an HSA. In the department’s view, the arrangement would also give rise to fiduciary and prohibited transaction issues.
Q: Can an employer pay the fees associated with the HSA that the employee would normally be expected or required to pay without causing the HSA to become an ERISA-covered plan?
A: Yes. As stated in the FAB, the mere fact that an employer contributes to an HSA does not result in the HSA’s being an ERISA-covered plan. Therefore, Labor does not consider that an employer paying fees associated with an HSA that the employee would otherwise be required to pay would make the HSA an ERISAcovered plan.
Q: May an HSA vendor offer an HSA product it offers to the public to its own employees without the HSAs being considered covered by ERISA?
A: Yes. Offering HSA products that the employer extends to the public in the regular course of business would not mean the HSA provider established or is maintaining the HSA as an employer to provide benefits to its employees.