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What are the tax advantages of owning an HSA?

Triple Tax Savings:

  • Contributions are tax free
  • Earnings are tax free
  • Withdrawals are tax free when made for eligible medical care expenses


HSAs allow three kinds of tax-favored contributions:

  1. Employee contributions that are deductible over-the-line (i.e. deductible even by non-itemizers)
  2. Employer contributions that are excluded from income and employment taxes.
  3. Salary reduction contributions made through a Section 125 cafeteria plan.


All three forms of contributions are exempt from federal income taxes. Employer and salary reduction contributions (section 125 cafeteria plan) are exempt from FICA and FUTA as well.

Last update on May, 16 2013 by Administrator.

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