Categories: Fedweek

Automatic HSA Allocations Phasing In

Government payroll providers are phasing in a system in which federal employees enrolled in high-deductible FEHB health plans may make pre-tax allotments to the health savings accounts that are a feature of those plans directly through payroll withholding. The new arrangement is being phased in according to payroll provider, starting with employees serviced by the General Services Administration effective April 27; other payroll providers will follow later in the year, and by January 1, 2008, all eligible employees will be able to make automatic allotments to their HSAs. After the payroll provider has set up its system of pre-tax HSA allotments, employees serviced by that provider may establish pre-tax HSA allotments using the same method that they would use to establish other allotments, such as through automated systems such as MyPay. If an agency uses a payroll self-service system, it will provide additional instructions to employees regarding establishing, altering or canceling allotments. Under the current arrangement, employees must put funds into HSA accounts with after-tax dollars and then claim the tax benefit on their tax returns for the year.

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