Exclusion of Employer HSA Contributions

§ 106. Contributions by employer to accident and health plans(a) General ruleExcept as otherwise provided in this section, gross income of an employee does not include employer-provided coverage under an accident or health plan. (b) Contributions to Archer MSAs(1) In generalIn the case of an employee who is an eligible individual, amounts contributed by such employee’s employer to any Archer MSA of such employee shall be treated as employer-provided coverage for medical expenses under an accident or health plan to the extent such amounts do not exceed the limitation under section 220(b)(1) (determined without regard to this subsection) which is applicable to such employee for such taxable year. (2) No constructive receiptNo amount shall be included in the gross income of any employee solely because the employee may choose between the contributions referred to in paragraph (1) and employer contributions to another health plan of the employer. (3) Special rule for deduction of employer contributionsAny employer contribution to an Archer MSA, if otherwise allowable as a deduction under this chapter, shall be allowed only for the taxable year in which paid. (4) Employer MSA contributions required to be shown on returnEvery individual required to file a return under section 6012 for the taxable year shall include on such return the aggregate amount contributed by employers to the Archer MSAs of such individual or such individual’s spouse for such taxable year. (5) MSA contributions not part of COBRA coverageParagraph (1) shall not apply for purposes of section 4980B. (6) DefinitionsFor purposes of this subsection, the terms “eligible individual” and “Archer MSA” have the respective meanings given to such terms by section 220. (7) Cross referenceFor penalty on failure by employer to make comparable contributions to the Archer MSAs of comparable employees, see section 4980E. (c) Inclusion of long-term care benefits provided through flexible spending arrangements(1) In generalGross income of an employee shall include employer-provided coverage for qualified long-term care services (as defined in section 7702B(c)) to the extent that such coverage is provided through a flexible spending or similar arrangement. (2) Flexible spending arrangementFor purposes of this subsection, a flexible spending arrangement is a benefit program which provides employees with coverage under which—(A) specified incurred expenses may be reimbursed (subject to reimbursement maximums and other reasonable conditions), and (B) the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage. In the case of an insured plan, the maximum amount reasonably available shall be determined on the basis of the underlying coverage.