WASHINGTON - The IRS and Treasury have issued proposedregulations designed to clarify and expand on guidance regardingcomparability rules for employer Health Savings Account (HSA)contributions. HSAs are tax-free savings accounts that can be usedto pay for medical expenses including prescription andover-the-counter drugs incurred by individuals, spouses ordependents. Unused HSA money rolls over from year to year and canthen be used to pay for medical care up to the plan's deductible.In general the proposed regulations would affect employers thatcontribute to employees' HSAs. Unlike many other employer-providedtax-favored benefits, the HSA rules do not have nondiscriminationrules restricting the amount of benefits provided to highlycompensated employees. Instead, the HSA statute requires that allemployer pre-tax contributions to employee HSAs be the same amountor the same percentage of the High Deductible Health Plan (HDHP)deductible for all employees with the same category (self-only orfamily) of HDHP coverage. The proposed regulations also clarifythat the comparability rules do not apply to amounts rolled overfrom an employee's HSA or Archer MSA or to after-tax employeecontributions. In addition, it provides an exception from thecomparability rules for employer contributions to cafeteriaplans.

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