Compliance Q&A: HSA Contributions, International Coverage, and ERISA for Paid Leave Explained
- December 19, 2024
- Posted by: Gus Altuzarra
- Category: Compliance Q&A
11.28.24 | HSA CONTRIBUTION LIMITS
Q. An employee and their spouse have individual HSA coverage with different employers. Can each employee contribute the maximum $4,300 in 2025 even though the total exceeds the family maximum of $8,550?
If an employee has single coverage with an employer and their spouse has family coverage including dependent children through a different employer, can the employee with single coverage contribute the full single contribution amount and the other spouse contribute the full family amount?
A. If each spouse has their own employee-only HDHP, they can each contribute the single limit of $4,300 to their own HSA (even though that is more than the family limit).
However, the result is different if one spouse has family coverage. If either spouse has family coverage, the spouses are limited to the family contribution limit (which can be split among the spouses’ HSAs).
12.5.24 | HSA FUNDS OUT OF COUNTRY
Q. Can you use HSA funds for medical expenses out of the U.S.?
A. Yes, HSAs can pay for medical expenses outside of the U.S. as long as the expenses are qualified medical expenses. There is no requirement that these expenses be incurred within the U.S. IRS Publication 502 contains the rules for qualified medical expenses.
12.12.24 | PAID FAMILY LEAVE SUBJECT TO ERISA
Q. If an employer purchases a paid family leave policy in the private market to comply with a state mandate, would this be subject to ERISA?
A. While this is still a new area of the law, the consensus is that a paid family leave policy purchased to comply with a state mandate would be an ERISA plan.
Paid leave benefits are the types of benefits covered by ERISA’s definition of a welfare plan. There are various arguments why a private paid family leave policy would be exempt from ERISA, however none of these are perfect arguments. For example, ERISA does not apply to an employer’s payroll practices if the benefits are paid from the employer’s general assets. An insurance policy would not be payable from the employer’s general assets. There is also an exemption from ERISA for a private plan that is maintained “solely for the purpose of complying with applicable workmen’s compensation laws or unemployment compensation or disability insurance laws.” Paid family leave policies don’t fit squarely inside this definition.
While states likely did not consider the application of ERISA when they passed their paid family leave laws, the general consensus is that an insured policy providing paid family leave benefits would be subject to ERISA.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
