What is the tax treatment of employer contributions to an employee’s HSA?
In the case of an employee who is an eligible individual, employer contributions to the employee’s HSA are treated as employer provided coverage for medical expenses under an accident or health plan and areexcludable from the employee’s gross income. The employer contributions are not subject to withholding from wages for income tax or subject to the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act. Contributions to an employee’s HSA through a cafeteria plan are treated as employer contributions. The employee cannot deduct employer contributions on his or her federal income tax return as HSA contributions or as medical expense deductions under section 213.
Employer contributions (if they are within the set limits) to the employee’s HSA are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from the employee’s gross income. Employer contributions are not subject to withholding from wages for income tax or subject to the Federal Insurance Contributions ACT (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act. Contributions to an employee’s HSA through a cafeteria plan are treated as employer contributions. Employer contributions are not deductible by the HSA account holder.
