How do Employers benefit from HSAs?
HSAs make High Deductible Health Plans (HDHP) more attractive to employees. Employers can combine qualified HDHPs with HSAs to offer employees a lower cost alternative for healthcare insurance coverage. Lower administrative costs than Flexible Spending Accounts. You don’t have to set up claims administration and adjudication. Rather, it is the individual’s responsibility to report expenditures to the IRS (on their annual federal income tax statement) that are not qualified medical purposes. You pay no FICA on HSA contributions. Employer contributions are not reported as employee income, so you avoid paying FICA on these amounts. If the plan permits employee contributions to an HSA, the payroll deductions are made pre-tax so you do not pay FICA on these amounts either. Payroll deductions made through a Section 125 Plan are pre-taxed and exempt from FICA. Top What is the tax treatment for employee contributions? Contributions to their HSA can be made on an after-tax basis and taken as an
