Health Provider Group Suggests HSA Contribution Tax Law Changes

October 29, 2008 ( - A health plan trade group has asked the Internal Revenue Service (IRS) to delay the deadline for filing excise tax returns and payments for noncompliance under Sections 4980B and 4980D of the tax code.

Thomas Wilder, senior regulatory counsel at America’s Health Insurance Plans (AHIP), suggested in a letter to the tax agency that the final version of its rules concerning employer contributions to employee health savings accounts and related excise tax returns and payments should include a date for compliance that is three months after the end of the current non-compliance period.

The deadline could also be 90 days after the employer’s income tax return due date—whichever is later.

Wilder said the proposed AHIP change was necessary because there could be situations where a period of noncompliance lasts beyond the employer’s tax return filing deadline if the noncompliance was not discovered and corrected until after the income tax deadline.

AHIP backed a provision in the proposed regulation under Section 4980G allowing employers to provide boosted contributions to the HSAs of lower wage employees. The health insurance group also endorsed language that would permit employers to provide higher contributions to the HSAs of highly compensated employees who have self-plus-two coverage under a high-deductible plan.

IRS published the proposed regulation in a question-and-answer format July 16 (see  IRS Proposes New Rules on Employer HSA Contributions ). Until a final regulation is issued, under Section 4980G, employers can use the proposed regulation as guidance on employer contributions made January 1, 2007, or later, IRS said.

The group represents  1,300 health plans. More information about the AHIP position is available by calling Robert Zirkelbach at ( 202) 778-3200.