Health Savings Accounts can be set up to direct deposit qualified pre-tax deductions and benefits into a particular bank account for each employee, separately from where the employee’s net pay is deposited. This article will describe the steps necessary to set up HSA direct deposits.
First, set up deductions and/or benefits as District Payroll Items. The only aspect that is unique to HSA items is that the Payroll Item Type must be Health Savings Account in order to separate it from other deductions and benefits that are paid to a vendor.
- Go to Financials Main > Payroll > District Payroll Items
- Create Payroll Items
- The Payroll Item Type must be Health Savings Account
- Fill out all other details as necessary
You can then assign the new item(s) to employee using the instructions at Adding employee payroll items.
Direct Deposit Accounts
Then, add the bank account details for each employee’s HSA account.
- Go to Financials Main > Payroll > Employee Direct Deposit Accounts
- Edit the employee
- Add Health Savings Account
- Fill out all fields
The Employee Payroll Items will be added to every payroll run, like any other deduction or benefit.
On the Errors tab, the system will validate whether every employee with an HSA item also has an HSA direct deposit account set up. If you see the Error #68 Employee has a Health Savings Account Payroll Item but no Health Savings Account, then you need add the HSA direct deposit account details.
When generating ACH/paycheck files, each employee’s regular direct deposit and HSA direct deposit will be combined in the same file, each in a separate row.