Employers must make comparable contributions to all HSAs for comparable participating employees. Comparable participating employees are eligible employees under an HDHP and share the same plan coverage category.

The IRS looks at only two types of HDHP plan coverage: Self Only and Family. When setting up contributions, the amounts contributed to the Self Only coverage must be the same for all HSA eligible self coverage employees. This amount may differ from the Family coverage contribution but must remain the same within the Family coverage plan.

As of 2007, an employer can contribute higher amounts for non-highly compensated employees without violating the comparability rule, but must still comply with the comparability rules with respect to contributions made to HSAs of highly compensated employees and with respect to contributions made to HSAs of non-highly compensated employees.

For example: ABC Company can decide to make contributions as follows:

For all employees who select self-only HDHP coverage: $500 to all its highly compensated employees $700 to all its non-highly compensated employees

For all employees who select family HDHP coverage: $1,000 to all its highly compensated employees $1,200 to all its non-highly compensated employees

If the HSA is placed under a Section 125 plan, the employer comparable contributions do not apply. However, the employer's Plan must still pass the non-discrimination testing.

The Tax Break

Employers that contribute to an HSA and/or that offer an HSA under a Section 125 cafeteria plan can receive a deduction for those contributions. The employer's contributions to the HSA are treated as employer-paid coverage for medical expenses under a health plan or an accident plan. These contributions are excluded from an employee's gross wages and exempt from FICA, FUTA and RRTA.