CUNA Regulatory Comment Call

July 3, 2007



Please feel free to fax your responses to CUNA at 202-638-7052; Assistant General Counsel Lilly Thomas at; or mail them to Lilly c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004. Click here for a copy of this Request for Comment.


The Medicare Prescription Drug Improvement and Modernization Act of 2003 (Act) created Health Savings Accounts (HSAs) which are tax-exempt trust or custodial accounts established to help individuals covered by a “qualified health plan” pay for qualified medical expenses.

Both the employee and employer may contribute to the employee’s HSA. If an employer contributes to its employees’ HSAs, it must make comparable contributions to the HSAs of all comparable participating employees. An excise tax is imposed when an employer fails to make comparable contributions to the HSAs of its employees for a calendar year.

Comparable participating employees are those in the same category of employees and who have the same category of high deductible health plan coverage. Final regulations issued in 2006 clarified that these comparability requirements to do not apply to contributions made through a cafeteria plan.


This proposal addresses the comparability requirements of employers regarding employees who have not established an HSA by December 31 and employees who established an HSA but not notified the employer.

This proposal states that the comparability rules will be met for these employees if employers comply with a notice requirement and a contribution requirement to comply with the comparability rules. The notice requirement must be provided by January 15 of the following year and requires that the employer provide these employees a written notice that each eligible employee who, both establishes an HSA and notifies the employer that the HSA was established by the last day of February, will receive a comparable contribution. The notice may be delivered electronically.

For each employee that establishes an HSA and notifies the employer by the end of February, the employer must contribute comparable amounts to the HSA by April 15. The comparable amounts should take into account each month that the employee was a comparable participating employee plus interest. The proposed regulation includes sample language that employers may use in preparing their own notices.

Additionally, an employer may accelerate part or all of its contributions for the entire year to the HSAs of employees who have incurred qualified medical expenses above the amount contributed by the employer at that time. The qualified medical expenses must have been incurred during the calendar year. This provision is similar to the rule that allows employees to accelerate contributions to their HSAs through a cafeteria plan.

If an employer accelerates contributions for this reason, the contributions must be available on an equal and uniform basis to all eligible employees throughout the calendar year and employers must establish reasonable uniform methods and requirements for acceleration of contributions and the determination of medical expenses. An employer is not required to contribute reasonable interest on either accelerated or non-accelerated HSA contributions.

The proposal would be effective for employer contributions made on or after the date the final regulations are published in the Federal Register. However these proposed regulations may be relied upon for guidance pending the issuance of final regulations. Employers may alternatively continue to rely on the proposed regulations published on August 26, 2005, which provides that an employer is not required to make comparable contributions for a calendar year to an employee’s HSA if the employee has not established an HSA by December 31.

A public hearing has been scheduled for September 27, 2007.


  1. Do you agree that employers complying with the notice and comparability rules for employees who have not set up an HSA by December 31 or have not notified their employers would satisfy the comparability requirements?

    a. Yes _____
    b. No _____

    Please explain.

  2. The proposal gives eligible employees until the last day of February to establish an HSA and notify the employer of the HSA. Does this give employers enough time to contribute to HSAs by April 15?

    a. Yes _____
    b. No _____

    Please explain.

  3. Do you support the IRS providing sample language in its regulation for employers to use in preparing their notices?

    a. Yes _____
    b. No _____

  4. Do you agree that the employer notices may be delivered electronically?

  5. Do you support permitting the acceleration of employer contributions to the HSAs of employees who have incurred qualified medical expenses exceeding the employer’s contributions during the calendar year?

    a. Yes _____
    b. No _____

    Please explain.

  6. Please provide any additional comments.

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Lilly Thomas • Assistant General Counsel • (202) 508-6733 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •