Why do employer contributions count against HSA limits?
am I comparing apples and oranges? Yes - different purposes, different laws, different regulations.  One rationale could be that HSA benefits are immediate while retirement benefits are deferred, so the benefit of employer contributions are not felt until retirement and thus do not need as stringent a limit, but that's a complete guess. "It's going to be quite a challenge to give a definitive answer to any ""Why"" question about law, and especially so for a question about tax law. One would need to try to dig up statements made by the legislators (and/or their aides) crafting and debating the law. As it is, tax law is already inconsistent in many ways. (Why are there people who can't contribute to a Roth IRA directly but can contribute to a Traditional and then immediately convert it to Roth? Why are maximum limits for 401(k) plans and IRAs separate rather than being one combined ""retirement"" savings maximum?) In the absence of some specific legislative statements saying that it was set up this way for some specific purpose, one must assume that it was written with the some goals as all tax law: As a compromise between various ideas, trying to accomplish some specific purpose. Feel free to add in some level of inefficiency and it being hard to completely understand the entirely of the tax law, which leads to things perhaps not being as ""tidy"" as one might hope for. But there's no reason to think that the people crafting the tax advantages for HSA plans had any reason to use 401(k) plans as a template, or wanted them to accomplish the same goals." "Just like all employee benefits there is a focus on removing or limiting owners of businesses' ability to abuse tax preferences under the guise of an employee benefit. As you point out there is an overall plan maximum 401(k) for employer contributions and match contributions.  There is a nondiscrimination test for FSA programs (there is also a nondiscrimination test for medical plans under sections 125 and 105(h)).  Employer contributions are counted toward the total of HSA contributions.   Why an HSA has a different maximum arrangement than 401(k) is anyone's guess.  But the purpose of the limit is to prevent owners of companies from setting up plans that do little more than funnel tax free funds to themselves.  An owner/employee could pay themselves a wage, contribute the maximum, then have the ""employer"" also match the maximum, so there are limits in place."
"Thanks for your additional comments Sam, that is helpful. Here is an overview of what you can and cannot do with an FSA as it applies to your situation. The government intends that a general health FSA be used to cover expenses that are usually out-of-pocket when you are covered by a qualifying health plan. It is funded with pre-tax dollars and is on a use-it or lose-it basis. However, an HSA is itself a form of health coverage that is tax-advantaged, and the balance can be invested. Because of this, an HSA is not considered by the government to be a health plan that ""qualifies"" for use with a general health FSA. However, this means that a given covered person cannot have both of these simultaneously. In your wife's case, if you have an HSA and she has traditional health benefits with an FSA, this is not considered a problem since she can only use the FSA money for expenses incurred by members of your family on her plan. However, if she were to join you on the HSA (which sounds like it could be a good idea overall), she would need to wind down her FSA and would not be able to fund it for the next year. This could be a problem if you have a lot of money in the FSA that she isn't able to spend prior to joining the HSA. The reason why the government doesn't want one given person covered by both an HSA and given access to an FSA at the same time is that they are both tax-advantaged. What they intend is that people can set aside money pre-tax which they will use to pay their non-covered health expenses. If someone had both, there would be two potential problems: If you do ultimately want your wife to be on the HSA, see if you can spend what is left in her FSA, as it will end when she ends her health coverage with her employer. If the amount you stand to lose is significant, you may need to wait another year until your next open enrollment period or life event (such as the birth of a child) to enroll her on your HSA. It is also likely that her premium on the HSA will be lower, which could impact the effect of ending her FSA. Recently, there has also been a rule change regarding what is called a ""Limited Use"" FSA. These are FSAs that are used for qualifying non-""health"" expenses such as dental and vision that can be used together with an HSA. This may be something that is helpful to you and/or your wife on the HSA if your employer offers this as a possibility. Please note that unlike retirement accounts, you cannot ""rollover"" funds between FSA plans offered by two different employers as each FSA is a separate benefit fund that is on a use-it or lose-it basis (again, because the government wants to restrict tax-advantaged contributions to what you are likely to spend). You may also find the article here helpful to learn more about FSA/HSA combinations and Limited-Use FSAs. I hope this helps!" So I learned that your employer CAN force you to make employee contributions. However, this source seems to think that the mandatory employee contributions do not count against the 402(g) limit of $18,000. "Even if your employer decides not to include the HSA contributions in Box 12, the IRS will still be informed how much went into your HSA when the form 5498-SA gets filed. So you don't need to worry about the IRS; they'll get the information they want.  As for you, if you already know how much the ""employer contributions"" (both what the employer contributed and what you contributed through payroll deduction) were, and you know how much you contributed directly, then once you get your form 1099-SA you'll have all the information you need to complete your tax return." There's no one answer. You need to weigh the fees and quality of investment options on the one side against the slowly vesting employer contribution and tax benefits of 401k contributions in excess of IRA limits. You can contribute to both but the total contribution is capped: More than one plan. If you contribute to a defined   contribution plan (defined in chapter 4),   annual additions to an account are limited to the   lesser of $53,000 or 100% of the participant's   compensation. When you figure this limit, you   must add your contributions to all defined contribution   plans maintained by you. Because a   SEP is considered a defined contribution plan   for this limit, your contributions to a SEP must   be added to your contributions to other defined   contribution plans you maintain. Source: https://www.irs.gov/pub/irs-pdf/p560.pdf on page 6. Looks like it is a 20% penalty on the withdrawal (along with income tax).  Funds can be withdrawn for any reason, but withdrawals that are not for documented qualified medical expenses are subject to income taxes and a 20% penalty. The 20% tax penalty is waived for persons who have reached the age of 65 or have become disabled at the time of the withdrawal. Then, only income tax is paid on the withdrawal  Wikipedia HSA article Even though you are leaving the country, you still earned and contributed to the plan while you were working/living, so it is still subject to the taxes/laws in place. On a somewhat related note, check out this question here, as it may help you out a bit (similar but not really duplicate) - How do I withdraw all money from my HSA account as a non-resident? Don't panic this happens all the time. I looked online for a form that can be used to redeposit funds back into the HSA. This form can be used to redeposit funds withdrawn in error and cannot   be used to correct an Excess Contribution Return. Funds will be posted   as a correction and not as a contribution. The deposit will be entered   for the year the distribution occurred. It allows you to specify the year the incorrect distribution occurred. I authorize Optum Bank to make the withdrawal correction indicated   above. I have enclosed a check made payable to Optum Bank for the   amount I’d like redeposited to my account. I understand that this can   result in a possible corrected 1099-SA for the tax year indicated   above. Of course you need to get the forms for your account. Your question doesn't make much sense. The exceptions are very specific and are listed on this site (IRS.GOV). I can't see how you can use any of the exceptions regularly while still continuing being employed and contributing. In any case, you pay income tax on any distribution that has not been taxed before (which would be a Roth account or a non-deductible IRA contribution). Including the employer's match. Here's the relevant portion: The following additional exceptions apply only to distributions from a   qualified retirement plan other than an IRA: