Medlin Accounting Software

Health Savings Accounts (HSA)

For the majority of states, employer and employee contributions to a HSA are not-taxable (reduces gross earnings like a Section 125 plan does).

For the few "non-conforming" states, HSA contributions are part of the employee's state taxable wages.

Medlin Payroll Software does not currently have the ability to "handle" HSA items for non-conforming states.

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"Conforming" means the particular state treats HSA contributions the same as the federal government - not taxable.

"Non-conforming" means the state is taxing one or both contributions (employer and/or employee).  For example, California is currently a "non-conforming" state.  BOTH the employee and employer contributions to a Health Savings Account are to be reported as California taxable wages.