I have a potential employer with a strange solution for healthcare. They wish for you to select a HDHP from the marketplace with an HSA then they fund the HSA to pay for the healthcare premiums. I gather from the IRS 502 that paying premiums should not be a big deal as it is not exactly an employer sponsored plan. However, I am concerned about the potential for excess contributions to the HSA.
As single coverage, the contribution limit is $3400. The employer is looking to put $4000 into the HSA account for the payment of premiums. That would put me $600 over the contribution limit, but all that money will be spent out of that account to pay for the healthcare premiums.
I would potentially like to contribute up to $3400 to the HSA in order to pay for incidentals (co-pays, etc), but I am concerned about penalized due to the contribution potentially being $7400 total even though less than $3400 would remain in the account after the year.
My major question is whether or not the excess contribution looks at the actual contributions to the account over the year time or if it looks at the amount remaining in the account at the end of the year. I could not figure it out from the IRS forms and other user forums whether this was the case or not.