Social Securty Exemption

[ken_sylvania]

I've found that the employer does not have to be SS exempt to benefit from the SS exemption. I handed in a copy of my signed form and the payroll company was able to honor it.

The regulations are very clear that if the employer is not exempt, the employee is not eligible for the exemption. Now, if you are working with a 4029 exempt PEO payroll company, then technically they are the employer and the exemption would be good. Otherwise, it's tax fraud. Doesn't mean you'll get caught, but it's still fraud.

[ShantyShaker]

Maybe I need to study more. I got that info from my accountant, and just had that at my previous employer. (The owner may be SS exempt, I don't know.)
I'm now on a 1099 setup currently at my new job.

[RZehr]

I just found out that if someone is Social Security exempt, they are ineligible for Health Savings Accounts (HSA's).

[Bootstrap]

I just found out that if someone is Social Security exempt, they are ineligible for Health Savings Accounts (HSA's).

Really?

Why? That doesn't feel fair.

[RZehr]

Doesn’t seem to make sense to me. Our company insurance administrator was specifically asked to check into it and that is what he said he found.

[ken_sylvania]

Think about it this way.
In order to be eligible for an HSA, a person must be covered by a high deductible health plan (health insurance).
Anyone who signs form 4029 has certified that he/she is "conscientiously opposed to accepting benefits of any private or public insurance that makes ..... payments for the cost of medical care."

In order to be eligible for an HSA a 4029 exempt person would have to buy a product that he has certified he is conscientiously opposed to using.

[RZehr]

Think about it this way.
In order to be eligible for an HSA, a person must be covered by a high deductible health plan (health insurance).
Anyone who signs form 4029 has certified that he/she is "conscientiously opposed to accepting benefits of any private or public insurance that makes ..... payments for the cost of medical care."

In order to be eligible for an HSA a 4029 exempt person would have to buy a product that he has certified he is conscientiously opposed to using.

Okay, that makes sense. I thought HSA's were something anyone could have; I didn't know they had to be covered by a high deductible health plan.

[ken_sylvania]

I believe it used to be that everybody could have them. That changed with the advent of a certain glorious healthcare mandate, developed and implemented to protect the poor, taken-advantage-of people from the horrors of HSAs.

[Josh]

Health Savings Accounts are limited to people high-deductible health plans, and always have been. A lot more medical plans these days qualify than when they first came out. In my experience, the eligibility criteria are not well-enforced.

Someone who is social security exempt and who (presumably) participates in a brotherhood aid type of arrangement has access to something far better than a health savings account; the contributions others make to them (and that they make to others) are tax-deductible as charitable contributions from their first dollar. In an HSA, the only tax benefit is not paying taxes on the interest, which these days tends to be minimal anyway.

[ken_sylvania]

Health Savings Accounts are limited to people high-deductible health plans, and always have been. A lot more medical plans these days qualify than when they first came out. In my experience, the eligibility criteria are not well-enforced.

Someone who is social security exempt and who (presumably) participates in a brotherhood aid type of arrangement has access to something far better than a health savings account; the contributions others make to them (and that they make to others) are tax-deductible as charitable contributions from their first dollar. In an HSA, the only tax benefit is not paying taxes on the interest, which these days tends to be minimal anyway.

Dollars contributed to an HSA through a Section 125 plan are pre-tax, for both income tax and FICA tax purposes.
Dollars contributed to an HSA otherwise are tax deductible for income tax purposes, even if one does not itemize deductions.
Charitable contributions are only tax deductible if one itemizes deductions.