S corp owner can open an HSA

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in Small Business Tax

Q: In a recent issue, you wrote about the benefits of Health Savings Accounts. (12/29/03 issue) I am the owner of an S corporation. As the principal, can I use an HSA? J.L., via e-mail

A: Yes. While HSAs are being touted primarily as a vehicle for self-employeds, they're also a viable option for S corporation employees, including the principals. To be eligible, your only health insurance coverage must be in the form of a high deductible health insurance plan. For this purpose, a "high deductible" plan is defined as one with a deductible of at least $1,000 and out-of-pocket maximum of $5,000 for individual coverage; a deductible of at least $2,000 and out-of-pocket maximum of $10,000 for family coverage. A key attraction of HSAs is that unused funds in your account at the end of the year remain in the account.

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