Health Benefits

Benefit accounts your employer may offer

Frequently Asked Questions

Are an employer’s contributions to an HSA treated as a deductible health care expenses?

The tax treatment of employer HSA contributions depends on how the business is incorporated. For sole proprietors, partnerships, and S-corporations, contributions to a partner’s HSA will be treated as a distribution to the partner and included in the partner’s income and may be deductible by the partner but not by the business (see IRS Notice 2005-8 for treatment of HSA contributions in exchange for guaranteed payments of services rendered for partners and two percent shareholder employees of S-corporations). For larger corporations, employer contributions are treated as employer-provided coverage for medical expenses under an accident or health plan.

May an employer fully fund the employee’s HSA at the beginning of the year?

Yes. An employer may fully fund the employee’s HSA at the beginning of the year, however HSAs belong to the individual and not the employer and the employer has no further control over the accounts after they have been funded. As a result, many employers elect to fund employee’s HSAs periodically throughout the year.

Does an employer have to make contributions to an employee’s HSA?

No. Employers are under no obligation to make any contributions to their employees’ HSAs. Many employers find that contributing to employees’ HSA accounts may help improve adoption of HDHPs and HSAs, especially if they are transitioning from a more traditional type of health coverage.

Do employees get a tax benefit from an HSA?

Employee contributions to an HSA can be made by payroll deductions or personal deposits. When an employee makes contributions through a payroll deduction and is ran through a Section 125 plan (also called a salary reduction or cafeteria plan) these dollar are pre-tax, including social security tax. If employees make personal deposits into their HSA it is on a post tax basis. The amount can be deducted from their taxable income but they will not recover the social security tax.

What is a high-deductible health plan (HDHP?)

An HDHP is a health insurance plan that offers higher deductibles and lower premiums than a traditional health insurance plan. With an HDHP, the annual deductible must be met before plan benefits are paid for services. In order for an HDHP to be paired with a Health Savings Account, it must meet the following requirements.

IRS Guidelines for a qualified HDHP:

Year Annual Deductible Out-of-Pocket Expenses
2019 At least $1,350 for individual coverage and $2,700 for family coverage Not exceeding $6,750 for individual coverage and $13,500 for family coverage
2020 At least $1,400 for individual coverage and $2,800 for family coverage Not exceeding $6,900 for individual coverage and $13,800 for family coverage
Can I roll over or transfer funds from an existing HSA or Medical Savings Account (Archer MSA) into an HSA?

Yes. Pre-existing HSA funds or MSA monies may be rolled into an HSA and will continue their tax-free status.