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Cash costs both the employer and employee more than premiums or HSA contribution. Since cash is considered to be income for employees: - Employers have to pay
by xiaosun 13y ago
Cash costs both the employer and employee more than premiums or HSA contribution. Since cash is considered to be income for employees:
- Employers have to pay payroll taxes on the cash (~10-12% in taxes)
- Employees have to pay income taxes on the cash (~25%+ in taxes)
So an employer would effectively need to give $1.50 in cash to equal the same spending power as $1.00 in HSA contributions.
- dctoedt 13y agoAh -- good point; I forgot about the employer's payroll tax liability (Social Security and Medicare), and also about the fact that the employer's liability is effectively the employee's liability (because otherwise the employee would get all the cash including the employer's tax payment). Thanks for the correction.