Tax Treatment

There are two ways to receive a tax credit for HSA Contributions:

  • The employer may pre-tax employee contributions through a Section 125 (i.e., POP or FSA).
  • The participant may use an above-the-line deduction when filing taxes. If the tax credit is through a Section 125, the document must state it accordingly.

A self-employed individual of an S Corporation or LLC cannot pre-tax an employee HSA contribution through a Section 125.