Answer by John Burnett: If the gift is given for the opening of the HSA account, it will be considered interest under FDIC deposit insurance regulations. Given the dollar amounts in HSA accounts, it's very unlikely that the depositor will be upset that the account would not be qualified for unlimited deposit insurance coverage, but that fact should be pointed out to the customer.
IRS regulations would also require that this gift be reported as interest, if given for the opening of the account.
Answer by Randy Carey: John, but an HSA is a tax deferred investment, so there would really be no IRS reporting on the HSA account. I concur that if the gift was given directly to the customer and not credited to the HSA account, then it would require interest reporting. The question that I would have is, is it allowable under the IRS regulations? That I don't know.
First published on BankersOnline.com 7/9/12