The Customer Identification Program (CIP) is the process that HSA custodian banks use to verify an employee’s identity when opening their account. This process uses four pieces of information:
- Legal name
- Date of birth
- Address
- Social Security number
Automatic verification
Usually, this information is collected during the enrollment process and CIP is completed automatically. With automatic verification there's nothing the employee needs to do, and their HSA will be available from their Forma account immediately.
Manual verification
Occasionally, further verification may be required. This could happen for a variety of reasons, usually because there was an error in the employee’s Social Security number, they recently moved, or recently changed their legal name. This prevents the custodian bank from verifying the employee’s identity.
In this case, the employee will receive a CIP verification email around 7-10 business days after Forma receives the application request, asking them to submit documents to help verify their identity. Then, the HSA will be opened in 7-10 business days.
What happens if an employee fails CIP?
If an employee fails the CIP check, Forma will send an email asking them to provide further identity verification, which may include a copy of their Social Security card, W2, birth certificate, driver’s license, or a utility bill. We send a follow up notice daily until the document is received and the application is processed. If the CIP verification is not completed within 180 days, the HSA application will be closed and their account will not be opened.
How do I track employee HSA application status?
CIP reports can be downloaded directly from Forma Admin. See How do I create a Pre-tax HSA CIP Report in Forma Admin?
What happens to HSA contributions while CIP is in process?
HSA contributions sent to Forma will remain pending until the employee completes the CIP process. Once completed, the funds will be automatically deposited into the employee's HSA account.
What happens to HSA contributions if the employee does not pass CIP?
Since the HSA account won’t be opened if they don’t pass the CIP check, their contributions will be held in a pending state until the account is opened. After that, all pending contributions will become available.
If an employee fails to complete CIP within 180 days or has not completed CIP and is terminated, the employer can request a return of the contributions.
The employer should refund all of the employee’s HSA payroll deductions as standard taxable income subject to withholding and payroll taxes.
The employee will forfeit any employer contributions that would have been deposited if the employee had established the HSA.