HSA Contributions by employer

Forum|Forum|1 year ago
March 15, 2025
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Hello - I was in an HSA eligible HDHP plan by employer. My employer was the federal government, thus I had health insurance through them (FEHP). TT asks for contributions amount made by employer, however, my W2, Box 12 did not identify any contributions. My insurance administrator HSA issued a 5498-SA Tax Form. In that tax form, Box 2 shows Total contributions made in 2024. Is this a nuance of working with the federal government health insurance? Do I still indicate the contributions made by the employer in TT even though the amount doesn't show up in my W2?

BillM223

Level 15

No, your employer just made a mistake.

All HSA contributions made either by your employer or by you through payroll deduction are reported with code W in box 12 on your W-2. This is not optional.

However, employers do make mistakes.

So, when you know the numbers (the total of how much your employer contributed PLUS how much you contributed through payroll deduction), then do the following:

1. Enter the HSA interview.

2. When you are asked if the employer told you about any other contributions, answer YES.

3. Three more lines will appear. The bottom one will say something like "Employer contributions for 2024 not reported on the W-2".

4. Enter your HSA contributions that should have been on your W-2 on this bottom line.

NOTE: these HSA contributions SHOULD HAVE BEEN REMOVED from Wages in boxes 1, 3, and 5 on your W-2. You have no way of knowing of your employer did that just by looking at your W-2; you have to ask them.

If your employer also did not remove these HSA contributions from Wages in boxes 1, 3, and 5 on your W-2, then right now, these contributions are still taxable. That is, your employer has made two mistakes.

To deduct these HSA contributions in this case, then, you would go into the HSA interview (Deductions & Credits->Medical->1099-SA, MSA, HSA), and look for the screen, "Let's Enter [name's] HSA contributions." On the second line, where it says "personal contributions", enter your dollar amount there.

This is not normally the right place, but if your employer also made the second mistake of not removing the HSA contributions from Wages 1, 3, and 5 on your W-2, then this is how you fix it.

You should talk to your employer first and ask them what they did.

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gjgogolAuthor

Level 5

@BillM223So after doing a lot of additional searching and talking to my agency's payroll office, I think I learned something a little different. I have GEHA HDHP health insurance plan associated with an HSA. A portion of my HDHP premiums are deposited monthly into my HSA, i.e. “premium – pass through” by GEHA. My agency does not pass through or contribute to my HSA, however, my insurance company (GEHA) does. For each month that am enrolled in their HDHP and eligible for an HSA, the HDHP will pass through (contribute) a portion of the health plan premium to my HSA. In addition, I may contribute my own money to my HSA up to an allowable amount determined by IRS rules. Your HSA dollars earn tax-free interest.

From my insurance brochure...

Federal tax tip: There are tax advantages to fully funding your HSA as quickly as possible. Your HSA contribution payments (not GEHA’s pass through contributions) are fully deductible on your Federal tax return. By fully funding your HSA early in the year, you have the flexibility of paying qualified medical expenses from tax-free HSA dollars or after-tax out-of-pocket dollars. If you don’t deplete your HSA and you allow the contributions and the tax-free interest to accumulate, your HSA grows more quickly for future expenses.

Conclusion (I think)...the contribution by the insurance company that comes out of my premium is not tax deductible.

BillM223

Level 15

Ah, the old "pass-through". That's important to know.

Let's make some assumptions (you can tell me if they are true or not):

1. When the "pass-through" premiums are sent to your HSA administrator, they appear in box 12 with a code of DD. Thus, they are removed from Wages box 1 just like regular insurance premiums.

2. Any HSA contributions that you made by payroll deduction were also removed from Wages (somehow). Did you make any by payroll deduction?

To enter your contributions, go into the HSA interview. When you get to the screen, "Did your employer tell you about any other contributions?", answer YES.

Three new lines will appear. On the bottom line it reads, "Employer and payroll contributions not reported in box 12 of your W-2". Enter the total contributions (from box 2 on the 5498-SA) here.

This works ONLY if your employer removed all HSA contributions from Wages in Box 1 on your W-2. If this is done right, it will not change your tax due or refund, but will make your paperwork right.

NOTE: a funny thing is that your insurance premiums (code DD in box 12) are removed from Wages, but only from Wages. Employer contributions and your contributions through payroll deductions (code W in box 12) are removed from Wages in boxes 1, 3, and 5. So the result is that when your employer (or you, whoever is paying your health insurance premiums) sends money to the insurance company who then sends some of it to your HSA, that because it is reported with code DD instead of code W, you end up paying Social Security and Medicare tax on the amount of the pass-through.

"From my insurance brochure..." All the things said here are true. The HSA is one of the best deals tax-wise in town, because not only are your contributions tax-free, but also all of your earnings, and so long as you use the money taken out for qualified medical expenses, it will stay tax-free even as you spend it. Smart people use the as a special savings account for when they retire, because you can pay for things like Medicare premiums which you normally can't deduct because the Standard Deduction is so high.

"the contribution by the insurance company that comes out of my premium is not tax deductible." On the contrary, it IS tax-free, if it was part of the code DD amount.

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