Final answer:
Diana's excess contribution amount is $50, and the excise tax is option $3. Another benefit of an HSA is that the funds can be invested and grow tax-free, making it a great long-term savings vehicle. Additionally, contributions to an HSA are tax-deductible, reducing an individual's taxable income and providing further tax benefits.
Step-by-step explanation:
To calculate Diana's excess contribution amount, we need to find the total annual contribution to her health savings account (HSA).
Her monthly contribution is $225, so the annual contribution is $225 * 12 = $2,700.
Her employer contributed $1,000 for the year.
Therefore, the total annual contribution is $2,700 + $1,000 = $3,700.
The maximum allowable contribution for an individual in 2022 is $3,650.
Hence, Diana's excess contribution amount is $3,700 - $3,650 = $50 (Option A).
To calculate the excise tax, we need to multiply the excess contribution amount by the excise tax rate.
In 2022, the excise tax rate for excess contributions is 6%.
So, the excise tax is $50 * 6% = $3 (Option A).
This can lead to employees either not contributing enough or contributing too much and losing the excess funds. With an HSA, employees can adjust their contributions throughout the year based on their healthcare needs and don't have to worry about losing the funds if they don't use them.