May 13, 2008

Welcome to Benefits Challenge. Benefits Solved.

Here is a free, fun and intriguing way to test your knowledge. Each edition of the News & Review will include a test on topics such as FMLA, COBRA, FSA, HRA, HSA along with others various topics.

Question: An employer offers a high-deductible health plan and wishes to make comparable contributions to employee health savings accounts (HSAs). What is the employer’s obligation if an employee fails to establish an HSA by the end of the calendar year?

Your Response: INCORRECT

THE CORRECT ANSWER IS C.  Considerable. The employer must notify the employee that the contributions will be forfeited unless the employee establishes an HSA and notifies the employer by the end of February following the calendar year.

The IRS issued Final Comparability Regulations in April that established the rule. This applies only to employer contributions made outside of a cafeteria plan. The employer must make these contributions and add a reasonable interest rate by April 15.