No one needs to remind business owners that the cost of employee health care benefits keeps going up. One way to provide some of these benefits is through an employer-sponsored Health Savings Account (HSA). For eligible individuals, an HSA offers a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. Here are the key tax benefits: Contributions that participants make to an HSA are deductible, within limits. Contributions that employers make aren’t taxed to participants. Earnings on the funds in an HSA aren’t taxed, so the money can accumulate tax-free year after year. Distributions from HSAs to cover qualified medical expenses aren’t taxed. Employers don’t have to pay payroll taxes on HSA contributions made by employees through...

The IRS recently released guidance providing the 2023 inflation-adjusted amounts for Health Savings Accounts (HSAs). High inflation rates will result in next year’s amounts being increased more than they have been in recent years. HSA basics An HSA is a trust created or organized exclusively for the purpose of paying the “qualified medical expenses” of an “account beneficiary.” An HSA can only be established for the benefit of an “eligible individual” who is covered under a “high deductible health plan.” In addition, a participant can’t be enrolled in Medicare or have other health coverage (exceptions include dental, vision, long-term care, accident and specific disease insurance). A high deductible health plan (HDHP) is generally a plan with an annual deductible that isn’t less than $1,000 for self-only coverage and...

With the increasing cost of employee health care benefits, your business may be interested in providing some of these benefits through an employer-sponsored Health Savings Account (HSA). For eligible individuals, an HSA offers a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. Here are the important tax benefits: Contributions that participants make to an HSA are deductible, within limits. Contributions that employers make aren’t taxed to participants. Earnings on the funds in an HSA aren’t taxed, so the money can accumulate tax free year after year. Distributions from HSAs to cover qualified medical expenses aren’t taxed. Employers don’t have to pay payroll taxes on HSA contributions made by employees through payroll deductions. Eligibility rules To be eligible for...

The IRS recently released guidance providing the 2022 inflation-adjusted amounts for Health Savings Accounts (HSAs). Fundamentals of HSAs An HSA is a trust created or organized exclusively for the purpose of paying the “qualified medical expenses” of an “account beneficiary.” An HSA can only be established for the benefit of an “eligible individual” who is covered under a “high deductible health plan.” In addition, a participant can’t be enrolled in Medicare or have other health coverage (exceptions include dental, vision, long-term care, accident and specific disease insurance). A high deductible health plan (HDHP) is generally a plan with an annual deductible that isn’t less than $1,000 for self-only coverage and $2,000 for family coverage. In addition, the sum of the annual deductible and other annual out-of-pocket expenses required...