What are the tax benefits and regulations?

Contributions to the HSAs are tax-deductible* at the federal and state level. Money that is withdrawn to pay for qualified medical expenses is not subject to tax or penalty. In addition, earnings on your funds in your HSA are also tax free, as long as they are used to pay for qualified medical expenses. Consult your tax advisor for details.

The Treasury Department and IRS set guidelines on annual contribution levels for HSAs along with minimum deductible amounts and maximum amounts for out-of-pocket spending on HSA-qualified HDHPs. For more information, please refer to the contribution guidelines.

If your employer offers a cafeteria plan, you can contribute to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you do so, you cannot additionally take the “above the line” deduction on your personal income taxes*.

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