HSA eligibility rules for small group employees

Are your employees eligible for an HSA?

Use these guidelines to determine when and how your employees can establish and/or contribute to a health savings account (HSA).

First the account holder must meet four requirements:

  • Covered by a qualified high deductible health plan (HDHP)
  • Not covered by any other non-HDHP (this includes a health flexible spending arrangement (FSA), unless it's a limited purpose FSA)
  • Not enrolled in any part of Medicare (A, B, or D)
  • Not claimed as a dependent on anyone else's tax return

These requirements only apply to the HSA account holder. Once an eligible employee has set up an account, they can use the HSA funds to pay for eligible expenses for themselves or their family, even if their dependents have different health coverage (that may not be a HDHP).

Employees with Medicare eligibility

An employee who is eligible for Medicare but isn't enrolled in a Medicare plan may establish and contribute to an HSA. Employees who are enrolled in Medicare (Part A, B or D) are not eligible to participate in an HSA, but they can still enroll in the HDHP as dual coverage with a Medicare plan.

If the member is dual-covered by Medicare and the HDHP, then Medicare Secondary Payer rules apply when determining how the HDHP and Medicare will coordinate.

Read the Centers for Medicare & Medicaid Services' Guide to Who Pays First.