Question

All of the following are true regarding health savings accounts (hsas) except: question 7 options:

a. hsa funds can be invested.
b. contributions made to the hsa by the plan participant are tax-deductible as an adjustment to gross income (above-the-line).
c. if an employer makes contributions to an hsa on behalf of an employee, the employer contributions are included in the taxable income of the employee.
d. to be eligible to make hsa contributions, an individual must be covered by a high deductible health insurance plan.

Answer 1

Regarding Health Savings Accounts (HSAs), it is incorrect that employer contributions are included in the taxable income of the employee; they are actually excluded, providing a tax benefit.

Step-by-step explanation:

The statement regarding Health Savings Accounts (HSAs) that is NOT true is: 'If an employer makes contributions to an HSA on behalf of an employee, the employer contributions are included in the taxable income of the employee.' This is incorrect because employer contributions to an HSA are actually excluded from the employee's taxable income, providing a tax advantage to the employee.

The other options provided are true. HSA funds can indeed be invested to potentially increase the account balance. Contributions made by the plan participant to an HSA are tax-deductible, reducing their gross income for tax purposes. Lastly, to be eligible to contribute to an HSA, one must be covered by a high-deductible health insurance plan which is part of the qualifying criteria for this type of savings account.