The IRS has issued a notice providing both employers and employees with a set of formal questions and answers on Health Savings Accounts (HSAs). Contributions to HSAs are deductible by employees in determining adjusted gross income, which effectively allows taxpayers with high-deductible health insurance to make contributions on a pre-tax basis to cover health care costs.
The guidance includes over 40 frequently asked questions and answers, grouped into categories including eligible individual, HDHPs, HSA contributions, HSA distributions, prohibited transactions, and establishing an HSA.
[The following paragraph applies to individuals who participate in a health savings account. Delete if not applicable.]
As an individual who is eligible to participate in a health saving account or has previously reported a deduction for a HSA, you may wish to consider utilizing this tax-efficient plan for medical expenses. Please contact us at your earliest opportunity if you would like more information about health savings accounts, your eligibility to participate and how you can get the maximum tax benefit from deductible contributions.
[The following paragraph applies to employers who provide a health savings account to their employees. Delete if not applicable.]
As an employer, you are not required to make contributions to employee HSAs. However, if you make a contribution to any employee’s HSA, you must make comparable contributions to all comparable participating employee HSAs. Other rules apply as well. Please contact us if you would like additional information on this development, or if you would like us to perform an analysis to determine whether your current employee benefit plan is in compliance.