Comparable Contributions

This rule allows greater contributions for non-highly compensated (lower paid) employees without violating the HSA comparability rule for employer contributions made outside of a Section 125 cafeteria plan. Highly compensated employees typically have more than five percent company ownership during the current or previous plan year or have annual compensation of more than $95,000 (indexed for 2006) in the previous plan year.

• This ruling only applies to employer contributions made to the employee’s HSA outside a cafeteria plan.
• This will allow employers to contribute more to the HSAs of non-highly compensated employees without violating the comparability rule.
• Employers are already allowed to make greater contributions to non-highly compensated employees’ HSAs within the cafeteria plan. This rule now allows greater employer contributions to non-highly compensated employees outside the cafeteria plan.

Examples

The employer contributes $500 to Tom’s HSA. Tom is a full time employee with single coverage. Tom is also a highly compensated employee. The employer also contributes $700 to Rick’s HSA. Rick is also a full time employee with single coverage. However, Rick is a non-highly compensated employee. These conditions are permissible under the new rule for employers subject to comparability rules.

What are the benefits of this change?

Employers that do not maintain a cafeteria plan will be able to contribute more for lower income employees.

If you have questions, employers should contact their Humana Sales Representative.
Brokers should call Humana’s Spending Account Hotline at 800.281.6778.