Either the employer or the employee may pay the administrative fee associated with an HSA. The question is which one. There is no right answer, but here are some thoughts.

• Employer payment of the administrative fee will certainly encourage employees to elect an HSA.
• When Employees make contributions to an HSA through a Section 125 Plan, the Employer does not match FICA, Medicare, or pay Worker’s Comp premiums (in Ohio) on those contributions. This saves the Employer approximately 8% on amounts contributed to the HSA. It is quite probable that the Employer will save more in payroll tax savings than the total amount of fees paid on behalf of Participants.
• The Employer may want the employee to pay the monthly fee thus requiring the employee to take full responsibility for the Plan.
• The Employer may be financially unable to pay the fee.

The Wrong Way
Many administrators electronically withdraw monthly administrative fees directly from the HSA owners' HSA account. Unfortunately, this method decreases the amount that can be used to pay expenses by the amount of the fee. There may not be an additional deposit to cover the amount of the fee. This is not good as participants want the maximum possible amount to go into the account.

A Better Way
Regardless of whether the employee or employer pays the fee, the FlexBank HSA method of fee collection allows for the greatest amount of flexibility. Each month FlexBank electronically draws administrative fees from the employer ..... not from the HSA owner's account balance. It is the employer’s choice as to who actually pays the fee. If the fee is to be paid by the employer, then nothing further needs to be decided.

If the fee is to be paid by the employee, the employer merely withholds the monthly fee on a per pay period basis. Fees may be paid by the employee on a pre-tax basis through a Section 125 plan sponsored by the employer.

The FlexBank HSA Advantage

The decision as to who pays the and how is up to you.