Benefits Challenge

Question: An employer offers a high-deductible health plan and wishes to make comparable contributions to employee health savings accounts (HSAs). What is the employer's obligation if an employee fails to establish an HSA by the end of the calendar year?

• None. The employee forfeits these contributions.
• Minimal. The employer must make these contributions only if the employee can demonstrate a mistake of fact or a period of incapacity during the calendar year.
• Considerable. The employer must notify the employee that the contributions will be forfeited unless the employee establishes an HSA and notifies the employer by the end of February following the calendar year.
• Extensive. The employee has until the tax filing date (typically, April 15) to establish an HSA, then must notify the employer within 30 days of establishing the HSA.