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...
