Meet Sam.

Sam owns his business. As an S Corp owner he has never been able to take part in the Section 125 pre-tax savings on medical insurance premiums his employees enjoy. Even though the company pays his premiums, this has to be reported as income. To top it off, he has never been able to deduct his out-of-pocket medical expenses from his taxes unless his expenses exceeded 7.5% of his adjusted gross income.

With his new H.S.A. and High Deductible Health Plans (HDHP) he now has multiple opportunities to save on his insurance premiums and taxes.

• The company avoids payroll taxes on the employer and employee contributions to the employees’ premiums and to their H.S.A.’s.
• The company can deduct the cost of premiums for Sam.
• Sam can deduct his contributions to his own H.S.A. as an above the line deduction on his personal tax return.
• Funds accrued in his H.S.A. earn tax-free interest.

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