Questions and Answers
Are health savings account (HSA) contributions through payroll deduction in an employer’s Section 125 cafeteria plan excludable from income?
HSA contributions made through an employer’s Section 125 cafeteria plan avoid both federal income tax and FICA, which includes Medicare and Social Security. Since these contribution amounts are not subject to tax, they are not deductible on an income tax return. HSA distributions for eligible medical expenses are tax free.
(Posted: 09/20/2007)
