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Depositing Wellness Program Rewards into HSA

Good afternoon,

My boss wanted me to inquire about how other companies handle providing Wellness rewards as cash or by funding through HSA (pre-tax). Any feedback would be greatly appreciated...

Basically, our company wants to give employees who earn rewards from our Wellness program, the option of taking cash (taxed) or putting the money into their (pre-tax) Healthcare Spending Account. The concern is money from the program is considered taxable income, yet putting the money into an HSA would make it a pre-tax benefit.

It seems to us it should either be taxable or pre-tax but not both, but we have our Benefits department saying that their ERISA counsel said that the option is permitted to allow deposits from the Wellness program into an HSA.

The new vendor for our Wellness program mentioned that many other companies allow this same option, but the money is employer funded to the HSA (ours would be employee funded).

She just wants to know if any other company is allowing Wellness program cash rewards as deposits into HSAs; and if so, how is it being handled through Payroll.

Again, any feedback would be greatly appreciated.

Thank you!!

Comments

  • I am not a HSA expert, but I see no advantage to either the employee or employer in having this as a not-pre-tax program. The only time post-tax deduction makes sense is when you have a benefit that provides income to the employee. If the benefit is paid with post-tax deductions, then the benefit is not taxable. If the benefit does not supply income to the employee, then normally pre-tax deductions are the way go.

    kvfe01
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