IRS Exempts Union Workers From HSA Comparability Testing

The Internal Revenue Service has completed final regulations that explain how employers are supposed to try to make health savings account programs fair to employees.

The final rule, Employer Comparable Contributions to Health Savings Accounts Under Section 4980G, gives employers and their benefits advisors advice about how to make HSA contributions for various employees “comparable.”

An employer need not contribute to employees’ HSAs, but, if it does, it must contribute a comparable amount to the HSAs of all comparable participating employees, according to guidance given in the final rule.

Employers can distinguish between employees working in different cities, and between employees who have self-only or family health coverage, but they cannot distinguish between employees in the same city who happen to be in different divisions, and they cannot link employee contribution amounts to the HSA program participants’ wages or HSA contribution levels, officials write.

But a draft of the rule released in August 2005 showed that employers could exclude some employees from comparability testing, and the IRS expanded on those sections in the final version.

One change lets employers exclude some union members.