W-2 reporting for HSA contribuitons made through a cafeteria plan

[bdeancpa]

I have found no direct guidance on the proper reporting of HSA contribuitons an employee makes through a cafeterial plan. It appears the Form 8889 (HSA tax form) only makes sense of this type of contribuiton if it is treated as an employer contributon. This also seems to make sense given the fact that cafeteria plan contribuiton of other types are generally treated as employer contribuitons and funds are returned to the employer if not used. Does any one have a different optinino. Thanks for your help.

Dean Huber

[Gary Lesser]

Your analysis IS correct (but there is guidance).

In the case of an employee who is an eligible individual, employer contributions (provided they are within applicable limits) to the employee's HSA are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from the employee's gross income. The employer contributions are not subject to withholding from wages for income tax or subject to the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act. Contributions to an employee's HSA through a cafeteria plan are treated as employer contributions. The employee cannot deduct employer contributions on his or her federal income tax return as HSA contributions or as medical expense deductions under Code Section 213.

See IRC Secs 3231(e)(11), 3306(b)(18), and 3401(a)(22); Notice 2004-2 Q&A 19.

[Guest buie]

Please explain why the employer is not entitled to a tax deduction for the employer contributions. thanks.

[GBurns]

The employee cannot deduct on a 1040 etc the HSA contributions made on a pre-tax basis through a cafeteria plan simply because they were already treated to a tax deduction on the payroll. No double dipping is allowed.