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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:<\/p>\n
Eligibility rules<\/strong><\/p>\n To be eligible for an HSA, an individual must be covered by a \u201chigh deductible health plan.\u201d For 2021, a \u201chigh deductible health plan\u201d is one with an annual deductible of at least $1,400 for self-only coverage, or at least $2,800 for family coverage. (These amounts will remain the same for 2022.) For self-only coverage, the 2021 limit on deductible contributions is $3,600 (increasing to $3,650 for 2022). For family coverage, the 2021 limit on deductible contributions is $7,200 (increasing to $7,300 for 2022). Additionally, annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits for 2021 cannot exceed $7,000 for self-only coverage or $14,000 for family coverage (increasing to $7,050 and $14,100, respectively, for 2022).<\/p>\n An individual (and the individual\u2019s covered spouse, as well) who has reached age 55 before the close of the tax year (and is an eligible HSA contributor) may make additional \u201ccatch-up\u201d contributions for 2021 and 2022 of up to $1,000.<\/p>\n Contributions from an employer<\/strong><\/p>\n If an employer contributes to the HSA of an eligible individual, the employer\u2019s contribution is treated as employer-provided coverage for medical expenses under an accident or health plan. It\u2019s also excludable from an employee\u2019s gross income up to the deduction limitation. Funds can be built up for years because there\u2019s no \u201cuse-it-or-lose-it\u201d provision. An employer that decides to make contributions on its employees\u2019 behalf must generally make comparable contributions to the HSAs of all comparable participating employees for that calendar year. If the employer doesn\u2019t make comparable contributions, the employer is subject to a 35% tax on the aggregate amount contributed by the employer to HSAs for that period.<\/p>\n Taking distributions<\/strong><\/p>\n HSA distributions can be made to pay for qualified medical expenses, which generally means expenses that would qualify for the medical expense itemized deduction. Among these expenses are doctors\u2019 visits, prescriptions, chiropractic care and premiums for long-term care insurance.<\/p>\n If funds are withdrawn from the HSA for other reasons, the withdrawal is taxable. Additionally, an extra 20% tax will apply to the withdrawal, unless it\u2019s made after reaching age 65, or in the event of death or disability.<\/p>\n HSAs offer a flexible option for providing health care coverage and they may be an attractive benefit for your business. But the rules are somewhat complex. Contact us if you\u2019d like to discuss offering HSAs to your employees.<\/p>\n \u00a9 2021<\/em><\/p>\n <\/body> 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 […]<\/p>\n","protected":false},"author":1,"featured_media":89,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"pagelayer_contact_templates":[],"_pagelayer_content":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-90","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/90","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/comments?post=90"}],"version-history":[{"count":1,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/90\/revisions"}],"predecessor-version":[{"id":91,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/90\/revisions\/91"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/media\/89"}],"wp:attachment":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/media?parent=90"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/categories?post=90"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/tags?post=90"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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