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Tax Deduction Consulting: HSA Payroll Deduction for Employer Gorham ME

One of the new and innovative medical insurance plans today is the Health Savings Account. These are call HSA accounts and sometimes cafeteria plans. The idea is that money is set aside in an account that can be used to meet unexpected medical expenses. In many case, the employer can deduct the funds for the employee and insure that they are transferred to the account manager.

Michael John DellOlio (RFC®), JD, MBA
(207) 294-0401
16 Middle Street
Saco, ME
Company
Michael J. DellOlio & Associates, L.L.C.
Qualifications
Education: B.S.,MBA,J.D.,NASD Series 6,7,24,63,65; Maine Insurance License
Years of Experience: 24
Membership
IARFC
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Trustee Service, Pension Planning, Retirement Planning, Tax Planning, Tax Returns, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, BuySell, Compensation Plans

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Tax Deduction Consulting: HSA Payroll Deduction for Employer

HSA Payroll Deduction for Employer

Health Savings Accounts (HSA) are becoming more popular. The HSA payroll deduction for employer can be handled in a number of ways.

One of the new and innovative medical insurance plans today is the Health Savings Account. These are call HSA accounts and sometimes cafeteria plans. The idea is that money is set aside in an account that can be used to meet unexpected medical expenses. In many case, the employer can deduct the funds for the employee and insure that they are transferred to the account manager. The HSA payroll deduction for employer is one of those types of deductions that is not mandatory and must be authorized by the employee.

The HSA payroll deduction amount is listed on the W-2 form, but in most cases it is a pre-tax deduction. This is one of the advantages to the employee of the plan. Since the deduction is made from the gross pay earned before taxes are calculated, the tax amount is reduced. This is in addition to the idea that funds are being set aside for medical expenses or treatments. Since the fund managers may be investing the funds that remain in the plan, a third advantage is realized.

The employee is required to file an IRS form 8889 with their taxes when they have deductions or disbursements from an HSA. This must be done even if no funds were contributed, but only withdrawn from the account. Line 9 of the form 8889 is for the amount of pre-tax contributions made. There are limits to the total amount that can be placed into the plan, of course. It is also possible to make post tax contributions to the plan and these are listed on line 13. Usually, post tax contributions are made directly to the HSA and do not involve a payroll deduction.

When a distribution is made from the fund, the taxpayer should receive a 1099-SS form detailing the amount of the distribution. This amount goes on line 14-A of the form 8889. There might also be unreimbursed medical expenses that are entered on lone 15. T...

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