About E Federal Credit Union's HSA Program
Invoicing
E Federal Credit Union offers invoicing services to employers. Your company can be invoiced either on a monthly basis or as an annual fee prepaid.
Federal Tax Reporting
E Federal Credit Union will provide a 1099-SA and 5498-SA to the employee and the IRS for each individual HSA. As the employer, your company is not responsible for validating that HSA funds were used for any particular purpose. Your company is responsible for providing any pre-tax contribution amount in Box 12 on your employees’ W-2s. For contributions made by the employer or by the employee via payroll deduction, no income or payroll tax will apply either at the federal or Louisiana level.
If your company wishes to make contributions to employees’ HSAs, you have four options. First, you may arrange with your payroll processor for direct deposit of the contributions to the individual HSAs. Second, you may have E Federal Credit Union move funds from a business deposit account you establish at E Federal Credit Union. Third, you may set up an ACH origination relationship with E Federal Credit Union, allowing E Federal Credit Union to pull the contributions from an account of your choice at some other depositary institution based on your instructions. Finally, you can always provide us with a paper check together with instructions for how you would like the funds allocated to the employees’ accounts.
Annual Contribution Limits
The IRS determines the maximum amount that can be contributed to the HSA in a calendar year. For current contribution limits and information please view the “Contributing to an HSA” section of the Frequently Asked Questions page.
All contributions, regardless of their source (you, your employee, and/or IRA rollovers), count toward the contribution limit. Since you and your employees can make contributions to the HSA, it is important to coordinate contributions to avoid excess contributions and tax penalties.
Comparable Contributions – IRS Guidelines
According to the IRS, your contributions to employee HSAs must be comparable between all eligible employees. The comparability testing period is based on a calendar year and determined on a monthly basis.
Contributions are comparable if they are either:
- The same amount, or
- The same percentage of the annual contribution limit.
The single and family categories are tested for comparability separately. The family categories of self plus one, self plus two, and self plus three or more are tested separately. However, if you contribute to these categories, you may not contribute less to the self plus three or more category than is being contributed to the self plus two category; and the self plus two category may not be less than the self plus one category.
The comparability rules do not apply to your contributions made through a Section 125 cafeteria plan. You may make matching contributions through a Section 125 cafeteria plan (non-discrimination rules apply).
HRA or FSA Rollovers
You have the option to roll HRA or FSA funds into your employees’ HSAs on a one-time-only basis, which provides your employees with funds for medical expenses from day one. If your FSA plan allows FSA extensions, your employees can contribute to the HSA if the FSA balance is zero on January 1st, or if the FSA balance was rolled over to an HSA prior to January 1st. Consult your tax advisor or the IRS for details and reporting requirements regarding taxation of fund rollovers and other stipulations.
Disclaimer: E Federal Credit Union recommends that employers consult a qualified tax advisor for advice on the particulars of your situation. E Federal Credit Union cannot and does not give tax or legal advice.