Health Savings Account Employee Benefit

[Ruby B]

Our church has just established Health Savings Accounts plans for our employees. I have searched the Forum and the Reference Manual and have not found the answer to my question although there are some references to HSAs. I will appreciate any assistance to set up the payroll module for a HSA contribution. The following information applies to our church system and situation:

Operating System: XP
PCPlus ver. 11.5
Employees: All hourly paid
HSA: Employer Funded
California: Taxable as Income
Federal: Non-taxable

Please help ASAP.

[JohnDMeyers]

How do you setup a Health Savings Benefit deduction?

(you will have to create the Liability account in Fund Accounting / Setup / Maintain Chart of Accounts, first)

Payroll / Setup / Maintain Item Descriptions
ADD
21
HSA
Other Deduction
Liability account: 01-2102-000 HSA
Bank account: 01-1110-000 checking
Tax options: Pre-tax deduction

Then go to Payroll / Maintain List of Employee
Pay Item tab
ADD
21
$amount

[NeilZ]

John,

the way I read it, its not an employee deduction, its an employer funded HSA, which is taxable, and which also must be listed in Box 12 with code W.

[Jeff]

It sounds like you need to create a taxable benefit item. This increases the amount of taxable income for the employee but does not add any dollar amounts to the check. Since this is taxable only by California, check the state income tax and the amount and it will increase their state wages, but not there federal wages.

This same area you can set it up to show in Box 12 with the appropriate code.

[NeilZ]

Jeff,

here's a question for you. Right now it doesn't appear that the system has the capability to calculate and include the employer's liability for an HSA (or any taxable benefit) if the benefit is tied to the amount in the salary. Would that be possible in a future version or added to a wishlist?

[Ruby B]

Thank you all for your feedback.

I must admit, though, I'm a little dense and still do not understand how to implement what Jeff is suggesting.

Thanks again for your help.

[Jeff]

Under payroll go to Setup -> Maintain Item Descriptions. You will add a new Item that can be added to an employees paycheck. One of the item types is a taxable benefit item. This adds taxable income to the employee but does not add money to the paycheck.

After creating the Pay Item, you will then edit the employees paycheck to add this item to it.

Do that from payroll -> Maintain List of Employees and select the pay items tab. This is where you add that item to the employees paycheck.

[Ruby B]

Thank you, John, NeilZ and Jeff. Blessings and Godspeed.
Ruby
Now