The Facts

• According to the U.S. Department of Treasury, employees are generally allowed to make HSA contributions on a pre-tax basis. HSA contributions deducted directly from an employee's paycheck are not subject to income or FICA taxes.
  
  

Considerations

• HSA contributions are not subject to FICA taxes as long as they are made through an employer's Section 125 or cafeteria plan. According to the Internal Revenue Service (IRS), cafeteria plans are only available through employers that elect to offer this type of benefit to their employees. Cafeteria plans allow employees to obtain certain (medical or health-related) benefits on a pre-tax basis.
  
  

Warning

• Although HSAs offer employees several tax advantages, there are some limitations. For example, direct employee HSA contributions are subject to FICA taxes because they are considered wages.