Health savings account (HSAs) have several considerable advantages over employer welfare benefit plans.
The government does not consider HSAs under the control of the Employee Retirement Income Security Act of 1974 (ERISA), yet it will be happy to do so if your employer structures your HSA in the wrong way.
Whether ERISA regulates your HSA comes down to your employer’s control
HSAs are meant to be something you, as an employee, set up voluntarily and retain complete control over. If your employer starts to get too involved, the authorities may decide to apply ERISA rules.
If the authorities consider your employer is doing certain things to trigger ERISA regulations, then your employer assumes a fiduciary duty toward you. They will have to fill in more forms and comply with specific claim administration regulations. In other words, it means more work for them, so it is not in their interest or yours.
Can my employer open an HSA for me?
Your employer can open your HSA and deposit money into it. Yet, they cannot tell you which HSA provider you must use. While they can choose which HSA providers they prefer to work with or which company’s salespeople come and promote HSAs in your place of work, they cannot receive any kind of kickback from an HSA provider or prevent you from investing your funds elsewhere.
HSAs are not employee welfare benefit plans. Yet, if your employer says they are or acts like they are, then the Department of Labor may also decide they are. If this happens, it could damage your ability to control your funds in the way you wish unless you seek help to sort out the situation.