Sample Health Savings Account HSA Guidelines

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Document Header

Document Type: Health Savings Account (HSA) Guidelines
Category: Benefits & Wellness
Company: <Company Name>
Document Owner: <Department/Role (e.g., Total Rewards)>
Version: <Version Number>
Effective Date: <Effective Date (e.g., <Date>)>
Last Review Date: <Date>
Next Scheduled Review: <Date> (review cycle: <Frequency (e.g., annually)>)
Approved By: <Approver Title(s)> on <Date>
Applies To: Employees in <Country/Region(s)> eligible for an HSA under an HSA-qualified High Deductible Health Plan (HDHP)
Related Documents: HDHP Plan Design Guidelines, FSA/HRA Policy, Leave of Absence Policy, Payroll Funding Procedures, Data Privacy Policy, Vendor Management Standards
Supersedes: <Prior Document Name/Version>

Version History

Version	Effective Date	Summary of Changes	Author	Approver
<v1.0>	<Date>	Initial issuance	<Name/Role>	<Name/Title>
<v1.1>	<Date>	Updated contribution limits and vendor contact details	<Name/Role>	<Name/Title>
<v2.0>	<Date>	Annual review; alignment to HDHP and Section 125 updates	<Name/Role>	<Name/Title>

Purpose and Objectives

Provide a comprehensive framework for designing, implementing, and administering the Health Savings Account (HSA) program at <Company Name>.
Promote compliance with applicable laws and regulations in <Country>, including tax rules and HSA eligibility requirements.
Standardize processes across Total Rewards, Benefits Operations, Payroll, Finance, and Vendor partners.
Optimize employee financial wellbeing by enabling tax-advantaged saving for eligible medical expenses.
Ensure controls, data privacy, and risk management practices are embedded in daily operations.

Scope and Applicability

In Scope
- Employees enrolled in an HSA-qualified High Deductible Health Plan (HDHP) sponsored by <Company Name> in <Country/Region>.
- Employer contributions, employee pre-tax payroll contributions via Section 125 (or local equivalent), and after-tax contributions remitted directly to the HSA custodian.
- Processes for eligibility determination, enrollment, payroll funding, vendor interfaces, tax reporting, and regulatory compliance.
- Coordination with related programs including Limited Purpose Flexible Spending Accounts (LPFSA), Health Reimbursement Arrangements (HRA) where applicable, and wellness incentives impacting HSA contributions.
- US federal rules and general best practices; note state or local variations must be addressed with <Company Name> counsel.

Out of Scope
- Non-HDHP medical plans and non-HSA tax-advantaged accounts (e.g., general purpose FSA, Dependent Care FSA) except where coordination is expressly noted.
- Investment advice to employees.
- Vendor contractual terms beyond operational service levels and data requirements defined herein.

Program Overview

An HSA is an individually owned, tax-advantaged account used to pay or reimburse qualified medical expenses under Internal Revenue Code Section 213(d) or local equivalents.
To contribute to an HSA, an individual must be covered under an HSA-qualified HDHP, have no disqualifying coverage, not be enrolled in Medicare, and not be claimed as someone else’s tax dependent.
HSAs are portable and remain with the individual after termination of employment.
Employer and employee combined contributions are limited to annual IRS or local authority limits for <Plan Year>.

Core Principles

Compliance-first administration aligned to regulatory requirements and operational controls.
Simplicity for employees and consistency across business units.
Financial wellness and transparency of fees, investment options, and tools.
Equity, nondiscrimination, and comparability compliance across eligible employee groups.

Eligibility Rules

Employee Eligibility Criteria

Must be enrolled in <Company Name>’s HSA-qualified HDHP as of the first day of a month.
Must not have any disqualifying coverage, including:
- Enrollment in a general purpose Health FSA (including a spouse’s FSA) that covers medical expenses before the HDHP deductible is met.
- Enrollment in an HRA that is not HSA-compatible (unless structured as limited purpose, post-deductible, or retirement-only).
- Coverage under Medicare (Parts A, B, or D), TRICARE, or other non-HDHP coverage.
- Certain telemedicine or onsite clinic arrangements that provide significant medical benefits before meeting the HDHP deductible unless structured to be HSA-compatible per current guidance.
Must not be claimed as a tax dependent on another person’s return.
Limited Purpose FSA participation is permitted for dental and vision expenses; verify coordination rules below.

Dependents and Domestic Partners

HSA funds can be used for qualified expenses of the account holder, spouse, and tax dependents as defined by tax rules, even if they are not covered under the HDHP.
Expenses for a domestic partner who is not a tax dependent are generally not qualified; distributions for such expenses may be taxable and subject to penalties.

Effective Date of Eligibility

HSA eligibility is determined monthly. An individual eligible on the first day of a month may contribute for that month.
The IRS “last-month rule” may allow full-year contributions if eligible on <December 1 of <Plan Year>> and remaining eligible through the testing period; legal counsel should confirm applicability and communication.

Mid-Year Changes, Gain/Loss of Eligibility

Contributions must be prorated by month of eligibility unless the last-month rule applies.
If an employee loses eligibility mid-year (e.g., enrolls in Medicare), contributions must cease as of the loss effective date. Amounts already in the HSA remain the employee’s funds.
For employees changing coverage tier (self-only to family or vice versa), update contribution limit calculations for the months at each tier.

Enrollment and Account Setup

<Vendor Name> serves as the HSA custodian/trustee for <Company Name> (or insert vendor selection process if not final).
Account opening requires employee identity verification per Know Your Customer requirements. Employees must complete the HSA application with <Vendor Name> and accept applicable disclosures.
Default account features may include a debit card, online portal, mobile app, interest-bearing cash account, and optional investment menu once balance exceeds <Threshold Amount>.

Enrollment Windows

Initial eligibility: within <Number> days of HDHP coverage effective date.
Annual enrollment: during <Open Enrollment Month(s)> for <Plan Year>.
Qualified life events: changes permitted consistent with Section 125 rules and HSA eligibility changes.

Enrollment Data and Feeds

HRIS sends eligibility and demographic files to <Vendor Name> on a <Frequency (e.g., daily)> schedule.
Data elements include legal name, SSN or local identifier, address, coverage tier, effective date, payroll calendar, cost center, and plan year.

Contributions

Annual Limits and Catch-Up

Combined employer and employee contributions cannot exceed the annual limit set by the IRS or local authority for <Plan Year>.
Self-only limit: <Amount> for <Plan Year>.
Family limit: <Amount> for <Plan Year>.
Catch-up contribution for individuals age 55 or older: <Amount>.
State/local tax treatment may vary; confirm with <Tax Advisor Name/Team>.

Employer Contributions (Seeding and Matching)

<Company Name> may provide:
- Base seeding contribution of <Amount> for self-only and <Amount> for family coverage.
- Matching contribution of <Percentage>% on employee contributions up to <Amount> per year.
- Wellness incentive HSA contributions upon completion of <Program Name> activities.
Comparability or cafeteria plan nondiscrimination rules apply. Employer contributions must be uniform within defined employee categories or offered under a Section 125 plan with nondiscrimination testing.
Employer contributions count toward the annual limit.

Employee Contributions

Employees may elect pre-tax contributions via payroll on a per-pay-period basis, subject to annual limits and payroll cutoffs.
Mid-year changes are permitted prospectively consistent with Section 125 rules; retroactive changes are not permitted except to correct administrative errors.
Employees may make after-tax contributions directly to the custodian and claim an above-the-line deduction when filing taxes, subject to limits.

Contribution Timing and Proration

Unless the last-month rule applies, the annual contribution limit is prorated by months of eligibility.
Employer funding may occur at <Frequency (e.g., per pay period, quarterly, annual front-load)>. If front-loaded, address repayment if employment terminates before year-end:
- Example policy: no pro-rata repayment required for terminations; or
- Example policy: repayment of unearned portion via final paycheck where permissible.
Payroll will align contributions to <Number> pay periods per year and ensure caps are not exceeded.

Excess Contributions and Corrections

Employees and Payroll must monitor total contributions to avoid exceeding limits.
If excess contributions occur, employees should request a curative distribution from <Vendor Name> by <Deadline Date (e.g., tax filing deadline)> to avoid tax and penalties.
Mistaken contributions due to administrative error may be returned in accordance with custodian procedures and legal guidance.

Examples (Illustrative Only)

If the self-only limit is <Amount> and <Company Name> seeds <Amount>, the remaining employee contribution capacity is <Amount>.
If an employee is eligible for 9 months, the prorated limit is 9/12 of <Applicable Limit>.

Qualified Expenses and Distributions

Qualified medical expenses generally include those described in IRC Section 213(d), such as deductibles, coinsurance, dental and vision care, prescription drugs, and some over-the-counter items.
Insurance premiums are generally not qualified, except for specific cases (e.g., COBRA premiums, certain long-term care insurance, health coverage while receiving unemployment compensation, Medicare premiums after age 65, subject to rules).
Non-qualified distributions are subject to income tax and, if under age 65, an additional penalty of <Percentage>%.

Substantiation and Recordkeeping

Unlike FSAs, employers do not substantiate HSA claims. Employees are responsible for retaining receipts and documentation to prove qualified use in the event of a tax audit.
<Company Name> recommends retaining documentation for at least <Number> years after the tax year of the distribution.

Timing of Reimbursements

Qualified expenses incurred after the HSA is established may be reimbursed at any time in the future, provided receipts are retained and the expense was not previously reimbursed under another plan.

Death and Beneficiaries

Employees should designate an HSA beneficiary with <Vendor Name>.
If the beneficiary is a spouse, the HSA may transfer as an HSA; otherwise, it generally becomes taxable to the beneficiary.

Coordination with Other Benefit Plans

HDHP Plan Design Alignment

The HDHP must meet minimum deductible and out-of-pocket rules for <Plan Year> per IRS or local regulations.
Embedded deductibles for family coverage must comply with required minimums.

Flexible Spending Account (FSA) Coordination

Employees enrolled in the HDHP and contributing to an HSA may only enroll in a Limited Purpose FSA (LPFSA) for dental and vision expenses, or a post-deductible FSA where permitted.
Spouse’s general purpose FSA coverage disqualifies HSA eligibility unless the spouse’s FSA is limited purpose.

Health Reimbursement Arrangement (HRA) Coordination

HRAs must be designed as HSA-compatible (limited purpose, post-deductible, or retiree-only) if offered concurrently with the HDHP.

Telemedicine, EAP, and Onsite Clinics

Ensure these programs are structured to be HSA-compatible (e.g., free preventive services only) or apply a fair market value charge prior to satisfying the deductible, per current guidance and counsel advice.

Payroll and Finance Operations

Funding and Reconciliation

Payroll will process pre-tax employee contributions each pay period and transmit funding files to <Vendor Name> by <Time> on <Day of Week>.
Employer contributions will be funded on <Schedule> and reconciled against approval reports.
Finance will maintain a clearing account and reconcile bank debits to vendor confirmations within <Number> business days.

Tax Reporting

Employer and employee pre-tax payroll contributions are reported on Form W-2, Box 12, Code W (or local equivalent).
The HSA custodian issues Forms 1099-SA and 5498-SA (or local equivalents) directly to participants and tax authorities.
State or local tax treatment of HSA contributions and earnings may differ; <Company Name> will provide high-level guidance during annual enrollment but employees should consult tax advisors.

Data Privacy and Security

Data exchanges must adhere to <Company Name> data protection standards and applicable privacy laws in <Country/Region>.
Limit PHI data transmitted to the minimum necessary for administration.

Leaves, Terminations, and Status Changes

Leaves of Absence (LOA)

During unpaid LOA, employee payroll contributions pause. Employees may make after-tax contributions directly to <Vendor Name> if they remain HSA-eligible.
Employer funding during LOA follows the plan’s funding schedule unless otherwise stated in LOA policy.

Termination of Employment

Payroll contributions cease as of termination date. Employer may decide whether to prorate or cease employer funding; state policy in offer letters or benefits guide.
The HSA remains the former employee’s account; no COBRA applies to HSA itself. The HDHP may be COBRA-eligible.

Rehire Within Same Plan Year

Upon rehire, re-evaluate HSA eligibility and contribution capacity for remaining months. Coordinate limit tracking across pre-termination and post-rehire periods.

Vendor Management

Vendor Roles and Deliverables

<Vendor Name> acts as HSA custodian, providing account setup, debit cards, online access, investment platform, customer service, reporting, and tax documents.
Service Level Expectations:
- Account setup within <Number> business days of receiving complete enrollment data.
- Funding posted within <Number> business days of receipt.
- Card replacement mailed within <Number> business days.
- Monthly reporting delivered by <Date>.

Data and Reporting Requirements

Daily eligibility and funding files with acknowledgment receipts.
Monthly account activity reports: contributions, distributions, fees, investment transfers, and balances by employee.
Annual summary for tax season communications.

Fees and Transparency

Clearly disclose custodial, card, and investment fees. Determine whether <Company Name> or the employee pays each fee type.
If investments are offered, disclose expense ratios and any revenue share arrangements.

Controls, Compliance, and Risk Management

Maintain written procedures for contribution limits, file transmissions, funding approvals, and error corrections.
Access controls for HRIS, payroll, and vendor portals: role-based access, two-factor authentication, and quarterly access reviews.
Perform annual nondiscrimination testing for Section 125 and review comparability impacts of employer contributions.
Conduct annual vendor SOC report review (where available) and document remediation of noted exceptions.
Retain records for at least <Number> years in accordance with <Company Name> retention schedules.

Implementation Guidelines

Project Phases and Milestones

Design: finalize HDHP plan, employer contributions, LPFSA/HRA coordination, and eligibility definitions by <Date>.
Vendor Setup: execute agreement with <Vendor Name>, complete file specs, and conduct security review by <Date>.
Payroll Integration: configure deduction codes, employer funding logic, and limit controls by <Date>.
Testing: perform end-to-end testing of eligibility, funding, corrections, and reporting by <Date>.
Training: deliver administrator training to HR, Payroll, and Shared Services by <Date>.
Launch: open enrollment communications and employee support by <Date>.
Post-Launch Review: 30/60/90-day checkpoints with defect triage and enhancements.

Change Management and Decisions

Document decisions on front-loading, match design, and fee responsibility.
Align policies for rehired employees, LOA funding, and final payroll handling.
Establish exception approval process for off-cycle corrections and missed payrolls.

Testing Protocols

Test scenarios:
- New hire on 1st of month vs mid-month.
- Tier changes self-only to family and vice versa.
- Medicare enrollment mid-year.
- Over-contribution detection and cure.
- Vendor outage or file rejection and recovery.

Roles and Responsibilities

Role	Key Responsibilities
Total Rewards	Program design, policy ownership, plan documents, vendor governance, annual limits update, communication strategy
Benefits Operations	Day-to-day administration, case management, escalation to vendor, QA on files and funding, reporting
Payroll	Deduction setup, per-pay-period funding, contribution limit tracking, W-2 reporting, reconciliation
Finance/Accounting	Funding approvals, bank reconciliations, fee payment processing, accruals
Legal/Compliance	Regulatory review, nondiscrimination testing oversight, policy approvals, privacy compliance
HRIS/IT	Data integrations, file transmissions, access controls, incident management
Vendor (<Vendor Name>)	Custodial services, participant support, cards, portal, tax forms, performance reporting
Managers	Reinforce enrollment timelines, refer employees to resources, refrain from tax advice
Employees	Complete HSA enrollment, monitor contributions, retain receipts, update beneficiaries, seek personal tax advice

Review and Approval Process

Draft prepared by Total Rewards and reviewed with Benefits Operations, Payroll, Finance, Legal, and HRIS.
Legal/Compliance review for regulatory alignment and risk controls.
Approval by <Approver Title(s)> recorded in version history.
Publication to <Intranet/Portal Name> and update to related procedures.
Annual review prior to <Open Enrollment Month> or upon regulatory change.

Operational Procedures

Contribution Limit Monitoring

Payroll systems must enforce per-pay-period caps and year-to-date limits, factoring employer seeding and match.
For employees with multiple jobs or transfers within <Company Name>, consolidate contributions under a single tax ID.

Error Handling and Corrections

Documented process for late or missed contributions includes:
- Identify variance and root cause.
- Obtain approval from <Role> for off-cycle funding.
- Transmit corrective file labeled per vendor requirements.
- Confirm posting and close incident with evidence.
For mistaken contributions, follow custodian return procedures and record adjustments in payroll.

Employee Support and Escalations

Tier 1: <Service Center Name> handles FAQs, navigation, basic eligibility.
Tier 2: Benefits Operations handles complex eligibility, corrections, and vendor escalations.
Urgent escalations (e.g., card decline for urgent care) prioritized with <Vendor Name> under agreed SLA.

Legal Notes and Disclaimers

The HSA program is governed by applicable tax laws in <Country>. This guideline is not a Summary Plan Description or plan document.
<Company Name> may amend or terminate the HSA program at any time, subject to applicable law and collective bargaining agreements where relevant.
Employees are responsible for their personal tax compliance and should seek independent tax advice.

Metrics and Continuous Improvement

Participation rate target: <Percentage>% of HDHP enrollees.
Average employee contribution target: <Amount> per year.
Employee satisfaction target: <Percentage>% favorable in benefits survey.
Operational metrics: file success rate > <Percentage>%, funding timeliness > <Percentage>% on-time, ticket resolution within <Number> business days.
Annual post-mortem after open enrollment to identify design and process improvements.

Frequently Encountered Edge Cases

Spouse opens a general purpose FSA mid-year: employee loses HSA eligibility prospectively; stop contributions and communicate options.
Employee turns 65 mid-year and enrolls in Medicare Part A retroactively: adjust contributions to avoid excess; coordinate with tax advisor due to retroactive enrollment rules.
Veterans Affairs or Indian Health Service benefits: review waiting period impacts on HSA eligibility per current guidance.
International transfers: HSA rules are US-specific; for cross-border cases, suspend contributions and consult <Legal/Tax Team>.

Glossary

HSA - Health Savings Account; individually owned tax-advantaged savings for qualified medical expenses.
HDHP - High Deductible Health Plan that meets statutory requirements for HSA eligibility.
LPFSA - Limited Purpose Flexible Spending Account restricted to dental and vision (or post-deductible) expenses.
HRA - Health Reimbursement Arrangement; employer-funded account that can be HSA-compatible if properly designed.
Qualified Medical Expenses - Expenses defined under IRC Section 213(d) or local equivalent.
Last-Month Rule - Provision allowing full-year contributions if eligible on <Date> and meeting testing period.
Comparability Rules - Requirements for employer HSA contributions outside Section 125 to be comparable across employee categories.
Section 125 - Cafeteria plan rules governing pre-tax payroll deductions and nondiscrimination testing.
Catch-Up Contribution - Additional contribution allowed for individuals age 55 and older.
Curative Distribution - Withdrawal of excess contributions and attributable earnings by tax filing deadline.

Appendices

A. Contribution Design Examples (Illustrative)

Design Option	Employer Contribution	Notes
Base Seed	Self-only: <Amount>; Family: <Amount>	Funded <Frequency>; no clawback at termination
Match	<Percentage>% up to <Amount>	Encourages savings behavior; monitor nondiscrimination
Wellness Incentive	<Amount> upon completion of <Activity>	Consider taxable alternatives for non-eligible employees

B. Annual Administration Calendar (Sample)

Q3: Design updates, limit announcements, vendor fee review.
Q4: Open enrollment, system updates, employee education.
Q1: W-2 and tax forms readiness, contribution resets, post-enrollment audit.
Ongoing: Monthly reconciliations, vendor reviews, metric tracking.

Communication Section: Employee and Manager Guide

Welcome to the <Company Name> Health Savings Account (HSA)

If you enroll in the <Company Name> High Deductible Health Plan (HDHP), you may be eligible to open and contribute to a Health Savings Account (HSA) with our HSA partner, <Vendor Name>. An HSA helps you save money on a tax-advantaged basis for today’s healthcare needs and tomorrow’s. You own the account, it stays with you if you leave <Company Name>, and unused funds roll over year to year.

Who is eligible To contribute to an HSA, you must be enrolled in the HSA-qualified HDHP, have no other disqualifying health coverage (including a spouse’s general purpose FSA), not be enrolled in Medicare, and not be claimed as someone else’s tax dependent. If you are unsure, contact <Service Center Name> before enrolling.

How contributions work You can set a contribution amount per paycheck, up to the annual limit for <Plan Year> (including any amount <Company Name> contributes). If you are age 55 or older, you may be able to make an extra catch-up contribution. You can change your contribution during the year if your situation changes, subject to program rules.

<Company Name> may contribute to your HSA. This could be a base amount, a match on what you contribute, or a wellness incentive. The specifics are in your benefits guide:

Company base contribution: <Amount> for self-only and <Amount> for family coverage
Company match: <Percentage>% up to <Amount>
Wellness incentive: <Amount> for completing <Activity>

These are examples; check the benefits site for the current year’s details.

Spending your HSA Use your HSA debit card or request reimbursement for qualified medical expenses like your HDHP deductible, coinsurance, dental and vision care, and prescriptions. Some over-the-counter items are eligible too. Insurance premiums are usually not eligible, with a few exceptions (for example, COBRA premiums or certain Medicare premiums after age 65). If you use HSA funds for non-qualified expenses, you may owe taxes and, if under age 65, an additional penalty of <Percentage>%.

Keep your receipts. You are responsible for proving that your HSA spending was for qualified expenses if asked by a tax authority. <Vendor Name> offers a tool to store receipts, but you can also keep them yourself.

Getting started

Enroll in the HDHP during <Open Enrollment> or within <Number> days of your hire or life event.
Open your HSA with <Vendor Name> through the benefits portal; complete any identity verification steps.
Choose your per-paycheck contribution amount. You can change this later if you need to.
Activate your HSA debit card when it arrives and set up your online account and beneficiaries.

Investing your HSA Once your cash balance reaches <Threshold Amount>, you may be able to invest in mutual funds or similar options through <Vendor Name>. Investing adds risk, including the possibility of loss, so choose carefully. <Company Name> does not provide investment advice.

Life changes If you change from self-only to family coverage, your annual HSA limit may increase. If you enroll in Medicare, you will need to stop contributing as of your Medicare effective date. If your spouse opens a general purpose FSA, you may lose HSA eligibility. Contact <Service Center Name> if you have questions about your situation.

If you leave <Company Name> Your HSA is yours. Payroll contributions will stop with your final paycheck, but you can keep the account with <Vendor Name> or move it to another HSA custodian. Fees may apply; see <Vendor Name>’s fee schedule.

Taxes and forms Your pre-tax payroll contributions and any company contributions will be reported on your W-2. <Vendor Name> will provide tax forms related to your HSA activity. State taxes may be different. <Company Name> does not provide personal tax advice; please consult a tax professional.

Where to get help

Benefits website: <URL> for details, FAQs, and the current year’s limits
<Service Center Name>: <Phone> or <Email> for enrollment and general questions
<Vendor Name>: <Phone> or <URL> for card issues, account access, and tax forms

This guide provides a high-level overview. The official program rules and your eligibility are determined by applicable laws and the plan documents.

Document Information:

Document Type: Health Savings Account (HSA) Guidelines
Category: Benefits & Wellness
Generated: August 24, 2025
Status: Sample Template
Next Review: <Insert Review Date>

Usage Instructions:

Replace all text in angle brackets < > with your company-specific information
Review all sections for applicability to your organization
Customize content to reflect your company's policies and local regulations
Have legal and HR leadership review before implementation
Update document header with your company's version control information
At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.