As 2010 draws to a close, we want to remind you about the tax advantages of having a Health Savings Account (HSA).

If your company sponsored a high deductible health plan (HDHP) in 2010 and employees established Health Savings Accounts (HSAs), contributions made to the HSA by your company and by employees through salary reduction must be reported on form W2.

As the employer, you are responsible for determining:

1. that the employee was covered by a HDHP sponsored by the employer
2. that the employee was not covered by any impermissible non-HDHP employer plan (think full flexible spending account)
3. for catch-up contributions, that the employee was 55 or older- you may rely on the employees' self reporting for date of birth

Employee contributions made pre-tax through a cafeteria plan are considered employer contributions. These pre-tax cafeteria plan contributions should be combined with any contributions made by your company. This total is reported on Form W2, Box 12 using code W.

Contributions to an HSA by any Sub-chapter S 2% (or more) shareholders, members of an LLC or LLP are not allowed through a cafeteria plan. These folks, and any others who made their HSA contributions outside of the payroll system, deduct their contributions on their personal Form 1040.  

Once the IRS releases the 2010 version of Form 8889, we will send you an employee-facing communication. Should you have any questions on your HSA plan, please contact your Account Executive or consult with your tax advisor. We thank you for your partnership and hope you have a great week!

view all news