"How does the tax impact change of HSA payroll contribution vs. self contribution?"
The tax benefit is of having an HSA is that you get to put some of YOUR money into an account YOU control and own, the money that goes into the account is not subject to income tax and the money inside the account grows tax free.
This benefit obtains whether the money goes in pre-tax via payroll deductions or after-tax via checks you deposit. That is, if during the course of the year you put $1,000 of pre-tax money into an HSA, that money has never been subject to income tax. If however you put $1,000 of after-tax money into an HSA, you get a deduction for the contribution. The net from an annual income tax standpoint is exactly the same either way.
The advantage of pre-tax HSA contributions is that this money is not subject to FICA, while any after-tax money you contribute has been subject to FICA.. So you have to earn MORE after-tax money to make a given contribution then you'd if the contribution was pre-tax. More or less you're looking at a 7+ percent "front end load" when you make contributions after tax. Whether you can overcome that front end load by making your after-tax contributions at the beginning of the year as opposed to the pre-tax contributions trickling in over the year is a matter you have determine.
Tom Young
