A Health Savings Account (HSA) holds tax-exempt money that an employee can use for out-of-pocket medical expenses. An employee is eligible to set up an HSA if they satisfy all federal requirements, such as participating in a High Deductible Health Plan (HDHP).
- You and your employee can both contribute to their HSA.
- The maximum total annual contribution from you and your employee is their HSA plan deductible or the current IRS limit (whichever is lower).
- If your employee has an employee-deducted and company-contributed HSA, Box 12 on their Form W-2 will show the total of the two amounts.
- Contributions from you and your employee might be subject to taxes in some state and local jurisdictions.