Can an employer vary the amount of its HSA contribution based on class? The intent is not to favor HCE's, but to provide a class of employees who are losing a benefit (life insurance) with a financial replacement (the HSA contribution) for that benefit. I am thinking about the eligibility test, the C&B test? The class is a reasonable class. ANyone?

As far as I know, you can (1) discriminate in favor of the non-HCE's; and (2) contribute one level to those with employee only coverage and another level to those with family coverage. If the group losing life insurance is all NHCE, then it seems permissible. Otherwise, that employer should find another way, outside of the HSA and Cafeteria Plan, to make up for the lost life insurance.