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IRS proposes accelerated HSA contributions

Posted On: May. 31, 2007 12:00 AM CST

WASHINGTON--Regulations proposed Thursday by the Internal Revenue Service would allow employers that contribute to employees' health savings accounts to accelerate contributions for employees whose medical care expenses are greater than what the employer has so far contributed to the HSA during the year.

Such an acceleration would enhance the appeal of HSAs by reducing employees' concerns that their accounts could be exhausted if they incur big medical bills early in the year before employers make all of their contributions.

The proposed rule would apply to HSAs that are not part of Section 125 programs, in which employees make pretax contributions to their accounts. Benefit experts say such an acceleration of employer contributions to HSAs that are part of Section 125 programs already is permitted.