Are Employer contributions to HSA
for adult dependents spouses or children under age 26
who filing their own tax returns deductible?
Q-26. Are employer contributions to the HSA of an employee’s spouse (who is not an employee of this employer) excluded from the employee’s gross income and wages?
A-26. No. The exclusion under §106(d)(1) is limited to contributions by an employer to the HSA of an employee who is an eligible individual. Any contribution by an employer to the HSA of a non-employee (e.g., a spouse of an employee or any other individual), including salary reduction amounts made through a § 125 cafeteria plan, must be included in the gross income and wages of the employee. Notice 2008-59, 2008-29 I.R.B. 123, questions 23 through 27
Ginger asks on January 6, 2016 at 5:28 pm
I am employer that funds a HDHP [High Deductible Health Plan] and HSA’s [Health Savings Accounts] for all employees.
Have employee with an adult child who can no longer be considered a dependent.
Adult child needs to open her own HSA but is still covered on HDHP for two more years.
Can employer contribute to adult child’s HSA? If so, are there any tax advantages?
As the employer, I have employee that has an adult child who needs to set up her own HSA account because she graduated college and got married. Adult child is covered on parent’s HDHP funded by my company. Can employer contribute to adult child’s account? If so, does employer receive any tax advantage?
I have been all over the internet for two days about this. Yes adult child is 23, graduated college, married and is living on her own. I understand she can not file a joint tax return in order to remain eligible to fund the HSA. I am not able to find information on whether the employer can fund adult child’s HSA if covered under the employer’s HDHP.
You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
You have no other health coverage except what is permitted under Other health coverage, later.
You are not enrolled in Medicare.
You cannot be claimed as a dependent on someone else’s tax return. IRS Publication 969 Page 3
The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014.
|Self-only coverage||Family coverage|
|Minimum annual deductible||$1,250||$2,500|
|Maximum annual deductible and
other out-of-pocket expenses*
|* This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies.|
You can make contributions to your employees’ HSAs.
Does this mean employee’s HSA, but not dependents?
You deduct the contributions on your business income tax return for the year in which you make the contributions. If the contribution is allocated to the prior year, you still deduct it in the year in which you made the contribution. IRS # 969
Links & Resources
Internal Revenue Bulletin: 2008-29 Health Savings Accounts – Guidance