Does an employer need to create an HSA plan document?

The HSA is not a health plan and not subject to ERISA, so there is no benefit plan document for the HSA. However, employers that allow employees to make pre-tax payroll HSA contributions must create (or amend an existing) Section 125 Cafeteria Plan^.‡

The Section 125 plan document or amendment must state that employees are allowed to elect pre-tax payroll deductions to be contributed to their HSA and indicate how often the employee can make changes to that election. The law requires that employers allow employees to prospectively change their pre-tax HSA elections at least monthly during the plan year. UMB recommends employers review all these issues with their legal counsel.

Note:The combined total of employer HSA funding and employee pre-tax HSA contributions are subject to the IRS Section 125 non-discrimination rules.