Non-conforming states bypassed thru 125?

[jmor99]

States which do not allow HSA tax breaks can be bypassed by running the contribution thru a 125 plan. Is this a true statement? Doesn't sound acceptable to me but not sure.

[Don Levit]

jmor:

Interesting thought.

I was under the impression that the federal tax breaks still apply.

Isn't Section 125 a federal provision, which would not be under the authority of state regulation?

While states do have regulatory authority over state income taxation, they do not have authority over federal income taxation.

Regarding the offering of HSA/HDHPs in non conforming ststes, if insurers in these states could not offer these plans, what would be the point of the federal legislation?

Don Levit

[leevena]

Cannnot speak for every state, but here in CA the state does not allow for HSA deductibility. When you do your taxes, the state will have a different adjusted gross income than the feds. Sorry, good thought.