HSA Contributions Remain Tax Deductible

hsaEven though employer and pre-tax contributions to Health Savings Accounts (HSAs) are becoming threatened by the looming Cadillac Tax, after-tax contributions continue to be deductible.

While individuals can deduct unreimbursed medical expenses on Schedule A of their federal tax return, the expenses must exceed 10% of adjusted gross income before they are deductible. Qualifying contributions to an HSA, however, are deducted from gross income to determine adjusted gross income and not reported as medical expenses on Schedule A. As a result, after-tax HSA contributions are not limited by the 10% floor or income phase-outs that impact itemized deductions.