- Health Savings Account (HSA)
- An HSA is a tax-advantaged account established to pay for qualified medical expenses of an account holder who is covered under a high-deductible health plan. With money from this account, you pay for health care expenses until your deductible is met. Any unused funds are yours to retain in your HSA and accumulate towards your future health care expenses or your retirement.
In order to put money into an HSA you are required to have a High Deductible Health Plan (HDHP) in effect for either you or your family. A HDHP is simply health insurance that meets certain minimum deductible and maximum out-of-pocket expense requirements. **HSA_LIMITS_DEFINITION**
- Number of single coverage employees
- This is the number of single coverage employees you have that would participate in the High Deductible Health Plan (HDHP) and Health Savings Accounts (HSA).
- Number of married coverage employees
- This is the number of married employees you have that would participate in the High Deductible Health Plan (HDHP) and Health Savings Accounts (HSA).
- HDHP deductible amount
- Enter your deductible for your High Deductible Health Plan (HDHP) single person coverage and for married couple coverage. **HSA_MINDEDUCTIBLE_DEFINITION**
- HDHP premium amount
- This is the monthly premium you pay, per employee, for your High Deductible Health Plan (HDHP). Enter for both single person coverage and for married couple coverage.
- Normal premium amount
- This is the monthly premium you pay, per employee, for your traditional health insurance. Enter for both single person coverage and for married couple coverage.
- Average employer contribution
- Enter the percent of the employee's deductible that the employer will be contributing to their Health Savings Account (HSA).
- Average employee contribution
- Enter the percent of the employee's deductible that the employee will be contributing to their Health Savings Account (HSA).
- FUTA & State unemployment tax rate
- Enter your state unemployment tax rate. State unemployment taxes (SUTA) are generally not collected on health insurance premiums or HSA contributions, provided those premiums or contributions are either paid directly by an employer to an eligible accident and health plan, or paid by an employee on a pre-income tax basis under a 'salary reduction' plan (also known as a 'Section 125 plan' or 'cafeteria plan'). However, since rules may vary by state you should verify the SUTA treatment of HSA contributions in the state(s) you operate in. State unemployment tax will apply to HSA contributions made by an employee through a cafeteria plan on an after-income tax basis. Note that if your employees will earn more than the state's unemployment tax wage base the SUTA tax benefit will not affect the calculation.
This calculator assumes that all employees earn enough that the FUTA tax benefit does not impact our calculation. This would assume that all employees earn more the $7,000 plus the cost of the HDHP premium plus the total contribution to the HSA made by the employee.
- FICA and Medicare tax payments
- FICA and Medicare are not collected on any health insurance premiums paid by the employer or contributions to an HSA as long as those contributions are paid on a pre-income tax basis from an employee's paycheck. To allow your employees to make pre-income tax contributions you will need a 'salary reduction' plan (also known as a 'Section 125 plan' or 'cafeteria plan'). This calculator assumes that all employees are under the maximum FICA tax payment limits. For 2023, FICA OASDI would not be collected on income over 160,200 earned by an individual employee. If their income exceeded $160,200 the FICA tax savings would be limited or zero. Since Medicare tax payments have no income limit, this assumption would not affect tax savings for Medicare.
- Income tax rate for business expenses
- Enter your marginal income tax rate for your business. You are able to deduct the cost of any health insurance premiums and employer contributions from your business income taxes. The tool uses your marginal income tax rate to calculate the total income tax savings produced by these deductions to your taxable income.
