Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 15
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33•
At least 85% of the participating employees are not
Eligibility. A qualified individual must be covered by a
High Deductible Health Plan (HDHP) and not be covered
key employees.
by other health insurance except for permitted insurance
•
It benefits employees who qualify under a set of
listed under section 223(c)(3) or insurance for accidents,
rules you set up that do not favor key employees.
disability, dental care, vision care, or long-term care. For
calendar year 2012, a qualifying HDHP must have a de-
Your plan meets this participation test if it is part of a
ductible of at least $1,200 for self-only coverage or $2,400
cafeteria plan (discussed in section 1) and it meets the
for family coverage and must limit annual out-of-pocket
participation test for those plans.
expenses of the beneficiary to $6,050 for self-only cover-
When applying this test, do not consider employees
age and $12,100 for family coverage.
who:
There are no income limits that restrict an individual’s
eligibility to contribute to an HSA nor is there a requirement
•
Have not completed 3 years of service,
that the account owner have earned income to make a
•
Are part-time or seasonal,
contribution.
•
Are nonresident aliens who receive no U.S. source
Exceptions. An individual is not a qualified individual if he
earned income from you, or
or she can be claimed as a dependent on another person’s
•
tax return. Also, an employee’s participation in a health
Are not included in the plan but are in a unit of
flexible spending arrangement (FSA) or health reimburse-
employees covered by a collective bargaining agree-
ment arrangement (HRA) generally disqualifies the individ-
ment, if the benefits provided under the plan were
ual (and employer) from making contributions to his or her
the subject of good-faith bargaining between you
HSA. However, an individual may qualify to participate in
and employee representatives.
an HSA if he or she is participating in only a lim-
ited-purpose FSA or HRA or a post-deductible FSA. For
Your plan does not favor key employees as to benefits if
more information, see Other employee health plans in
all benefits available to participating key employees are
Publication 969.
also available to all other participating employees. Your
plan does not favor key employees just because the
Employer contributions. Up to specified dollar limits,
amount of insurance you provide to your employees is
cash contributions to the HSA of a qualified individual
uniformly related to their pay.
(determined monthly) are exempt from federal income tax
withholding, social security tax, Medicare tax, and FUTA
S corporation shareholders. Because you cannot
tax. For 2012, you can contribute up to $3,100 for self-only
treat a 2% shareholder of an S corporation as an employee
coverage or $6,250 for family coverage to a qualified
for this exclusion, you must include the cost of all
individual’s HSA.
group-term life insurance coverage you provide the 2%
The contribution amounts listed above are increased by
shareholder in his or her wages. When figuring social
$1,000 for a qualified individual who is age 55 or older at
security and Medicare taxes, you must also include the
any time during the year. For two qualified individuals who
cost of this coverage in the 2% shareholder’s wages.
are married to each other and who each are age 55 or
Include the cost in boxes 1, 3, and 5 of Form W-2. How-
older at any time during the year, each spouse’s contribu-
ever, you do not have to withhold federal income tax or pay
tion limit is increased by $1,000 provided each spouse has
federal unemployment tax on the cost of any group-term
a separate HSA. No contributions can be made to an
life insurance coverage you provide to the 2% shareholder.
individual’s HSA after he or she becomes enrolled in Medi-
care Part A or Part B.
Health Savings Accounts
Nondiscrimination rules. Your contribution amount to
an employee’s HSA must be comparable for all employees
A Health Savings Account (HSA) is an account owned by a
who have comparable coverage during the same period.
qualified individual who is generally your employee or
Otherwise, there will be an excise tax equal to 35% of the
former employee. Any contributions that you make to an
amount you contributed to all employees’ HSAs.
HSA become the employee’s property and cannot be with-
For guidance on employer comparable contributions to
drawn by you. Contributions to the account are used to pay
HSAs under section 4980G in instances where an em-
current or future medical expenses of the account owner,
ployee has not established an HSA by December 31 and in
his or her spouse, and any qualified dependent. The medi-
instances where an employer accelerates contributions for
cal expenses must not be reimbursable by insurance or
the calendar year for employees who have incurred quali-
other sources and their payment from HSA funds (distribu-
fied medical expenses, see Regulations section
tion) will not give rise to a medical expense deduction on
54.4980G-4.
the individual’s federal income tax return. For more infor-
mation about HSAs, visit the Department of Treasury’s
Exception. The Tax Relief and Health Care Act of 2006
website at
allows employers to make larger HSA contributions for a
Publication 15-B (2012)
Page 15
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