If your employee is no longer enrolled in a High-Deductible Health Plan (HDHP), they are no longer eligible to receive Health Savings Account (HSA) contributions. You need to take action to ensure compliance and avoid potential tax penalties.
Steps to take:
Confirm Status: Verify that the employee is indeed no longer enrolled in a qualifying HDHP.
Stop Contributions: Log in to your Lively Employer Dashboard. Locate the specific employee and terminate their HSA plan within the system. This will stop any future contributions from being processed.
Notify the Employee: Inform the employee of the change. While they can keep the funds already in their account, they cannot make new contributions until they are covered by an HDHP again.
Troubleshooting:
Accidental Contributions: If you mistakenly continue contributions after eligibility has ended, initiate a reversal as soon as possible to minimize tax complications.
System Updates: Ensure you promptly update the employee’s status in your payroll system and any other benefits platforms to avoid future discrepancies.
Note: Lively is not a tax advisor. Before making any changes to employee benefits or contributions, we recommend consulting with an accountant or tax advisor to ensure compliance with all applicable tax laws and regulations.
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