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RTO Benefits Blog

What Is An HSA? Is It Subject To ERISA?

Health Savings Accounts (HSAs) are continuing to grow in popularity as insurance costs increase and employers are moving to high-deductible health plans. Let's take a closer look at what HSA's are, their benefits and compliance requirements.

What is an HSA?

An HSA is a tax-advantaged healthcare savings account and can be used to pay for qualified healthcare expenses. An HSA can only be offered with HSA qualified high deductible health plans. HSA's are portable, so if your employment ends, you own your existing HSA. If the participant's health plan changes they may keep their existing HSA to use for future qualified expenses but must maintain an HSA qualified high deductible health plan to continue to make new contributions to the HSA.

Many people today are treating their HSA as a 401K because the funds in the account don't expire and can be invested in mutual funds. Funds in the HSA can be used for future qualified expenses. Additionally HSA participants 65 and older can make non-medical distributions without being assessed a 20% penalty.

HSA's allow maximum contribution amounts each year. in 2017 the maximum amount which can be contributed to an HSA is $3,400 for individuals and $6,750 for families. Employers are able to contribute to accounts on behalf of their employees.


HSA's have a Triple Tax Advantage making them a smart option when available. The tax advantages include:

  • Contributions reduce taxable income

  • The account earnings are not taxed

  • Distributions for HSA qualified expenses are not taxed

Participants can use HSA funds to pay for qualified healthcare expenses incurred after the HSA was established. The plan will also stay active if the participant's health insurance plan changes.

**HSA funds can be used to pay for COBRA and Medicare premiums. HSA participants need to be 65 or older to use their funds for Part B, Part D, and Medicare Advantage premiums; they may also use their funds for employee premiums.


HSA plans typically are not subject to ERISA requirements as they are not viewed as "welfare benefit plans" by the DOL, as long as HSAs are voluntary for employees. This means it does not require a plan document but HSA language for pre-tax withholdings is often included in a Premium Only Plan (POP) or Flexible Spending Account (FSA) document.

The HSA option can easily be added to POP or FSA documents on the EnsuredCompliance solution. The option to add it can be found on the benefit pages. Learn more about how EnsuredCompliance can help your business.

For questions regarding how these plans impact your business, it may be best to contact your tax or legal counsel.