Health savings accounts are growing in popularity. Most health savings accounts (HSA) are not subject to ERISA, the Employee Retirement Income Security Act of 1974. This federal law established protections for participants in certain health and retirement plans, such as a 401(k). However, without careful planning, your employer may subject your HSA to ERISA.
By subjecting the HSA to ERISA, the employer assumes a fiduciary duty and is required to comply with certain administrative and filing requirements as well as following the Department of Labor claims procedures. Here are recommendations that employers follow in order to avoid falling under ERISA requirements.
Employers should not:
Impose conditions on asset use: By doing this, the employer shows a level of involvement and ownership. In addition, the employer may make this mistake as conditions are common with other types of health accounts, such as a flexible spending arrangement.
Limit HSA choice: Employees must retain complete control over their HSA. Any limitations on moving funds raise issues.
Influence investment decisions: Employees should be given reasonable choices of options and be free to move funds to another HSA without their employer influencing or making investment decisions.
Represent that HSAs are a benefit plan established or maintained by employer: Employers are typically advised not to get involved in the administration of the HSA or receive payment or compensation in connection with the HSA.
Require HSA coverage: The HSA coverage must be voluntary. Employers may open an HSA on behalf of an employee and deposit funds, but the employee must not be inhibited from choice on where funds remain.
If you believe that your employer is violating any of these recommendations, then your HSA may fall under ERISA guidelines and requirements. This may have an important impact on how a claim is administered.