[Wisconsin State Capitol] Contributions to Health Savings Accounts (HSAs) will no longer be taxed by the state after a new bill was signed into law by the Governor today.
“Providing tax deductions for HSA contributions can help make health insurance more affordable for those that use the accounts and provides savings for the businesses that offer them to employees,” said State Senator Sheila Harsdorf (R-River Falls).
HSAs are savings accounts owned by an individual that can be used for minor medical expenses, such as office visits, prescription and over-the-counter medications, and other preventative care. A high-deductible health insurance policy is used in conjunction with an HSA to cover major medical expenses.
HSAs are an attractive benefit to employees since they are portable and remain with an individual if they change jobs or leave the workforce. HSA contributions are currently exempt from federal taxation and Wisconsin was one of only a handful of states that had still been taxing contributions.
“HSAs empower health care consumers,” said Harsdorf. “Using the money from their HSA, individuals can pay for the medical treatments they deem necessary, with the provider they prefer, without having a gatekeeper telling them what care they can or cannot receive, or what doctor they must see. When consumers have more options, health care providers compete to offer the best possible care at the lowest possible cost.”
The HSA tax deduction was passed as part of the Legislature’s special session on job creation. The employers that contribute to their employees’ HSAs will also receive a tax benefit under the deduction since their contribution will not be taxed.
“Tax savings on HSA contributions will allow businesses to invest in hiring and training new workers,” said Harsdorf.