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How to model an employer contribution to an HSA in My Plan
How to model an employer contribution to an HSA in My Plan

This article describes how to account for employer HSA contributions in your Plan.

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Employer HSA Contributions

Some employers give employees tax-free money through a direct contribution to an HSA account. These contributions made by an employer to the health savings account (HSA) of an eligible employee are generally excludable from an employee's income and are not subject to Federal or state income tax, Social Security, or Medicare taxes.

If your employer contributes directly to your HSA account, we recommend the following:

Step 1: Head over to My Plan > Income > Income from Work and add an income stream for the dollar amount of the HSA employer contribution

Step 2: Add an income linked contribution. Select the dollar amount option and model the contribution amount to match the income stream.

When you do this, the Planner will apply a tax deduction as the same amount as the income, so there will be no Federal or State income tax on the income. The Planner will apply FICA, so there will be a 7.65% differential.

If you also make an employee contribution to your HSA account, you can enter your contribution on your standard Work Income stream. In this example, you contribute $2,400 to your HSA and your employer contributes $1,200 to your HSA:

NOTE: An alternative method is to enter the employer contribution as a windfall. When you do this the Planner will not apply any FICA or Income Tax to the income. The disadvantage of this approach is that you may have to enter multiple windfalls because windfalls are a one-time event.

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