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HSA contributions and health insurance payments for employees are usually deductible expenses for most businesses. Below is a guide pertaining to the different rules applying to HSA contributions and health insurance payments made on behalf of small business owners.

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Note that HDHPexpert.com is not a tax advice service and all information provided herein is for reference purposes only. Always consult a qualified tax professional within the state your company is domiciled prior to making any financial decisions.

C-Corporations (C-Corp’s)

Owners of C-Corporations are treated no differently than the employees of their company. They can contribute pre-tax to their own HSA’s.

Sole Proprietors (Sole Prop’s)

Self-employed people may not contribute to an HSA on a pre-tax basis. However, they may contribute o their HSA with after tax dollars and take an above-the-line deduction on their taxes.

S-Corporations (S-Corp’s)

Anyone that owns more than 2% of a corporation is regarded as an owner of the corporation with regards to HSA contributions. As a result they can not make pre-tax contributions to their HSA via a salary reduction. Any contribution made into an S-Corp owner’s HSA account are taxable and they may be deducted on the owner’s personal income tax.

LLC’s and Partnerships

Partnerships and LLC’s are generally treated as flow through entities for purpose of HSA contributions made on behalf of the owners. HSA contributions benefiting the owners are not deductible by the business but flow through to the owner.

For an IRS-provided list of recommended reading for small businesses, click here.