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Employer Meddling Could Turn HSAs Into ERISA Plans

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NU Online News Service, April 8, 2004, 12:59 p.m. EDT – The Employee Retirement Income Security Act of 1974 could apply to some health savings account programs.[@@]

The federal Employee Benefits Security Administration comes to that conclusion in a new field assistance bulletin that discusses the relationship between ERISA and the new HSA program.

The HSA section of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 lets eligible taxpayers who buy high-deductible health insurance policies exclude HSA contributions from taxable income.

MPDIMA goes out of its way to define an HSA as a personal savings vehicle rather than as a form of group health insurance, Robert Doyle, the EBSA director of regulations and interpretations, writes in the new field assistance bulletin.

Because HSA accounts are personal savings vehicles, the accounts themselves “generally will not constitute ?employee welfare benefit plans’ for purposes of the provisions of Title I of ERISA,” Doyle writes.

But, in most cases, ERISA will apply to the high-deductible health insurance coverage, and an employer that tries too hard to control HSA assets could turn the HSA program itself into an ERISA plan, Doyle writes.

An employer can make HSA contributions, impose conditions needed to satisfy federal tax requirements and forward payroll deductions to a single HSA provider without triggering ERISA, Doyle writes.

But an employer could trigger ERISA by:

- Telling employees that the HSA program is an employee welfare benefit plan.

- Requiring employees to contribute to HSAs.

- Putting extra limits on the ability of eligible individuals to move their funds to other HSAs.

- Making or influencing HSA fund investment decisions.

- Receiving any payments or compensation in connection with an HSA program.

More information about the EBSA field bulletin is on the Web at