HSA Employer Comparability Rules: Categories, Exceptions, and Excise Tax

The HSA employer comparability rules require that an employer contributing to any employee’s Health Savings Account give the same dollar amount, or the same percentage of the HDHP deductible, to every other eligible employee in the same coverage category. Contributions cannot vary by salary, job title, or performance. Getting it wrong triggers an excise tax of 35 percent of every dollar the employer put into HSAs that year, though a correction window and a reasonable-cause waiver exist.¹

What Counts as a Comparable Contribution

Contributions are comparable when they satisfy one of two tests. Either the employer gives the same flat dollar amount to each eligible employee with the same type of coverage, or the employer gives the same percentage of the annual HDHP deductible to each such employee.¹ Pick the dollar method and give $750 to one full-time employee with self-only coverage, and every other full-time employee with self-only coverage must also receive $750. Family coverage is tested separately, so family-plan employees can receive a different amount from self-only employees.

Testing runs on a calendar-year basis, not a plan-year basis.² The employer looks at each month of the calendar year and confirms that contributions were uniform across comparable employees who were eligible on the first day of that month.

The Employee Categories You Test Within

Employers do not have to contribute equally across the whole workforce. The IRS divides employees into three exclusive categories for comparability:³

Current full-time employees
Current part-time employees
Former employees

An employer can contribute to one category and skip another. You could fund HSAs for all full-time workers and give nothing to part-time or former employees. But once you contribute to anyone in a category, every eligible employee in that category with the same coverage type must receive the same amount. No other classification, whether by department, tenure, or location, is permitted to differentiate contributions.

Former employees who keep HDHP coverage only through COBRA are carved out of the former-employee category. If you contribute to former employees generally, you are not required to include those on COBRA.³

The Highly Compensated Employee Exception

When making contributions to non-highly compensated employees, the employer does not have to treat highly compensated employees as comparable participating employees.⁴ That means an employer can contribute a different amount, typically less, to highly compensated employees than to rank-and-file workers without breaking the comparability rules. For 2026, a highly compensated employee is someone who earned more than $160,000 in the prior year.⁵ Contributions to highly compensated employees still have to be comparable among themselves; the two pools are simply tested separately.

Who Falls Outside the Rules Entirely

Comparability applies only to contributions made for employees. Partners in a partnership, sole proprietors, and independent contractors are not employees, so HSA contributions directed to them do not enter the test. Shareholders who own more than 2 percent of an S corporation are generally treated as self-employed for health benefit purposes and are likewise outside the framework.

A small business owner who is a 2-percent-or-greater S-corp shareholder can therefore receive an HSA contribution that differs from what employees receive without creating a comparability problem. The tax treatment of the owner’s contribution follows different rules, but it does not knock the employer out of compliance.

Mid-Year Hires and Newly Eligible Employees

Employees who join partway through the year, or who become HSA-eligible after January 1, still count. Employers have three ways to handle the timing:²

Pay-as-you-go. The employer contributes monthly, or at set intervals, to the HSAs of employees eligible on the first day of each month. Everyone in the same category and coverage type receives the same amount on the same schedule.
Look-back. At year-end the employer reviews everyone who was eligible during any month and makes uniform contributions for each month of eligibility.
Pre-funded. The employer deposits the full annual amount at the start of the year, then goes back and makes comparable contributions for anyone who becomes eligible later.

The employer is not required to contribute more than a pro-rata share based on months of eligibility. But if the employer chooses to give a mid-year hire more than pro rata, that same higher amount has to go to every comparable employee who started or became eligible after January 1.²

When a Cafeteria Plan Replaces These Rules

Comparability does not apply at all when HSA contributions run through a Section 125 cafeteria plan. If the written cafeteria plan gives employees the option to receive cash or other taxable benefits instead of the HSA contribution, comparability steps aside and Section 125 nondiscrimination rules take over.⁶ The trigger is the employee’s right to elect cash in lieu of the contribution, whether or not anyone actually does.

That opens the door to contribution designs comparability would block. Matching contributions tied to employee salary reduction are the most common example. Wellness incentives also become available: an employer can add HSA money for employees who complete a health risk assessment or participate in a wellness program, provided the arrangement is written into the cafeteria plan.⁶ Section 125 has its own nondiscrimination testing, but for employers who want matching or incentive-based HSA contributions, routing them through a cafeteria plan is the standard path.

Fixing a Shortfall Before the Penalty Applies

If you find you have under-contributed to some employees, you have a window to correct it. The deadline is April 15 of the year following the calendar year in which the noncomparable contributions were made, and the make-up amount has to include reasonable interest.²

A separate obligation catches many employers. When an employee was eligible for a contribution but had not yet opened an HSA by year-end, the employer must send a written notice by January 15 of the following year. The notice tells the employee that if they establish an HSA and notify the employer by the last day of February, they will receive a comparable contribution for the prior year, plus reasonable interest, deposited by April 15.¹ This is where most comparability failures happen, because employers assume they owe nothing to workers who never opened an account.

The 35 Percent Excise Tax

If contributions remain noncomparable past the April 15 correction deadline, the IRS imposes an excise tax equal to 35 percent of the total amount the employer contributed to all HSAs during that calendar year.⁷ The penalty runs on the full aggregate contribution figure, not just the shortfall owed to shortchanged employees. That makes even a small comparability slip expensive when the overall HSA contribution pool is large.

Employers report and pay the tax on IRS Form 8928.⁸

One safety valve exists. If the failure resulted from reasonable cause and was not due to willful neglect, the IRS may waive some or all of the excise tax to the extent the full penalty would be disproportionate to the failure.⁴ The regulations do not draw bright lines around what qualifies. Employers who can show a working compliance system, prompt identification of the error, and a good-faith correction are in the strongest position to argue for a waiver.

1
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
2
eCFR. 26 CFR 54.4980G-4 – Calculating Comparable Contributions
3
eCFR. 26 CFR 54.4980G-3 – Failure of Employer to Make Comparable Health Savings Account Contributions
4
Office of the Law Revision Counsel. 26 USC 4980G – Failure of Employer to Make Comparable Health Savings Account Contributions
5
Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs
6
eCFR. 26 CFR 54.4980G-5 – HSA Comparability Rules and Cafeteria Plans and Waiver of Excise Tax
7
eCFR. 26 CFR 54.4980G-1 – Failure of Employer to Make Comparable Health Savings Account Contributions
8
Internal Revenue Service. Instructions for Form 8928 (Rev. December 2025)