I did not want to butt in on the other HSA thread, so starting a new one.

I was recently offered a stake in my company. A couple of the other partners have mentioned that I will lose eligibility to participate in the HSA when the deal is finalized. I have looked into it but cannot find anything saying that HCEs/owners are ineligible to participate in HSAs. Our company does not contribute towards the HSA, and only pays a portion of health plan premiums.

I have had an HSA for 20 years at this point so would prefer not to give it up. Anyone know if there is a rule against HCEs/owners participating in an HSA?

There's no rule preventing HCEs/owners from participating so long as the company handles the non-discrimination portion appropriately.

Missed out on a year of HSA contributions because of poor advice.

If you give "X" to employees, then you can give yourself "X".

One of the partners was forced by our PEO to drop his HDHP plan and apparently instructed to unwind 2 years of HSA contributions. I have asked for him to forward me the email where these instructions were delivered so I can figure out the basis/reasoning.

Sounds like they ****ed up the NDT.

But how do you do that when the company contributes $0 to the HSA, and a flat $ amount towards every employee's monthly premiums, regardless of HDHP or non HDHP plan?

Owners cannot give themselves any pre-tax money HSA if they don't offer the same to their employees, regardless of how much the company gives employees towards their plan.

The only thing that can occur is different HSA amounts for coverage elections/groupings - such as employee, employee+spouse, employee+kids, or family.

Can't give pre-tax HSA based on title/position. (not meaning full time/part time, that's a benefits eligible thing).

OnlyForNow said:

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Owners cannot give themselves any pre-tax money HSA if they don't offer the same to their employees, regardless of how much the company gives employees towards their plan.

The only thing that can occur is different HSA amounts for coverage elections/groupings - such as employee, employee+spouse, employee+kids, or family.

Can't give pre-tax HSA based on title/position. (not meaning full time/part time, that's a benefits eligible thing).

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The company cannot give the owners pretax dollars if the company does not offer the same to other employees.

The owners can contribute their own money on their own and deduct it when they file their personal income tax.

HSAs do not have to be funded through payroll deductions.

This is the response from the PEO, citing their master health policy:

I'm not really tracking why they think (1) HSA contributions would be "taxable"; (2) why there would be no tax benefit to having an HSA, just because premiums are paid post-tax

P.H. Dexippus said:

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This is the response from the PEO, citing their master health policy:

I'm not really tracking why they think (1) HSA contributions would be "taxable"; (2) why there would be no tax benefit to having an HSA, just because premiums are paid post-tax

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Go read IRS Publication 969 and take a look at how the math works on form 8889. If line 9 is zero, then your deduction is your own contributions up to the limit.

ETA: the deduction is on your own personal tax return. If you set it up and find it yourself, your employer would have zero involvement other than providing access to the HDHP.

I've reviewed 969. My take is that 2% shareholders:

• are eligible to contribute to an HSA
• HSA contributions must be on a post-tax basis, but are deductible
• HSA growth and withdrawals for qualified expenses are tax free

https://tax.thomsonreuters.com/blog/can-a-subchapter-s-corporations-owners-make-hsa-contributions-through-a-cafeteria-plan/

I am both eligible for an HSA and it still has significant tax advantages (especially as a stealth IRA). Not sure why they would say otherwise.