Hi,
I'll be on COBRA with an HSA-eligible plan for a partial year. My employer makes an HSA contribution in January each year for all current and former employees on the HSA-eligible plan. Even if I contribute $0 to my HSA, the employer contribution amount will likely exceed my total prorated contribution limit for the year, given that COBRA will end fairly early in the year.
What will I need to do to prevent or remedy this excess contribution situation? I've read that excess employer contributions for *active/current* employees are treated as W-2 income. Not sure whether that's correct, but if it is, I'm not sure how it applies to former employees on COBRA. I'm paying the full COBRA premium myself (in case that's relevant), and my employer will have no way of knowing that I have a prorated contribution limit for the year, so I doubt that they'd do any W-2 reporting (if that's even applicable for former employees).
Additional notes:
Bonus questions: Will my employer issue a W-2 (or some other form) for the contribution? If so, will the contribution be taxable to me? (Contributions aren't taxable for active employees, but I don't know how this works for former employees.)
Thank you for your expertise and advice - I appreciate it.
I'll be on COBRA with an HSA-eligible plan for a partial year. My employer makes an HSA contribution in January each year for all current and former employees on the HSA-eligible plan. Even if I contribute $0 to my HSA, the employer contribution amount will likely exceed my total prorated contribution limit for the year, given that COBRA will end fairly early in the year.
What will I need to do to prevent or remedy this excess contribution situation? I've read that excess employer contributions for *active/current* employees are treated as W-2 income. Not sure whether that's correct, but if it is, I'm not sure how it applies to former employees on COBRA. I'm paying the full COBRA premium myself (in case that's relevant), and my employer will have no way of knowing that I have a prorated contribution limit for the year, so I doubt that they'd do any W-2 reporting (if that's even applicable for former employees).
Additional notes:
- I'm assuming that my post-COBRA plan will *not* be an HSA. (If that changes, problem solved.)
- I plan to stay on COBRA until I'm no longer eligible, so switching to a non-COBRA plan for the full year isn't a desirable option.
Bonus questions: Will my employer issue a W-2 (or some other form) for the contribution? If so, will the contribution be taxable to me? (Contributions aren't taxable for active employees, but I don't know how this works for former employees.)
Thank you for your expertise and advice - I appreciate it.
Statistics: Posted by megaroth — Sat Aug 10, 2024 11:32 pm — Replies 4 — Views 440