Employees get a tax benefit from the Health Savings Accounts. How does that work?
Employee contributions can be made to a Health Savings Account on either pre-tax or after-tax basis. When employees make contributions pre-tax it is done through a Section 125 plan (also called a “salary reduction” or “cafeteria plan”), generally through direct deposit of payroll. If employees contribute funds on an after-tax basis, their taxable income can be reduced by the amount they contribute to their Health Savings Account, effectively making their contributions tax-free.
