Which statement about Health Savings Accounts (HAS) employer contributions is true?

• A. They are tax-deductible for the employee
• B. They are taxed as ordinary income to employee
• C. They are required to be funded by employer
• D. No tax payment needed

Answer: (D)

Employer contributions to a Health Savings Account are not taxed as income for the employee. When the employer funds the HSA, that amount is excluded from the employee’s gross income for federal income tax purposes, so no income tax is due on those contributions at the time they’re made. This fits with the HSA’s tax-advantaged design, which also allows earnings to grow tax-free and withdrawals for qualified medical expenses to be tax-free. The employee doesn’t get a personal deduction for the employer’s contribution, since deductions apply to contributions the employee makes themselves. And it’s not required that an employer fund the account— employees can contribute themselves, or both can contribute.