Personal HSA contributions are deductible but you still end up paying FICA (Social Security and Medicare) on the income prior to deduction. Same goes for the corporation that is paying you (they pay their side of it).

If a corporation is managing the HSA they can contribute to it directly and the amount does not show up as income (so no FICA). With a family HSA limit of $7000 this comes out to $7000 x (.062% +.0145%) = $535.5 (Not chump change!)

Can a corporation directly write you a check to fund your personal HSA and avoid FICA as well?

  • When you say "personal HSA", do you mean one that is not tied to your employer? – Nosjack Apr 2 '19 at 14:32
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    Why don't you want to use the one your employer recommends? Typically the employer picks up the monthly maintenance costs that would otherwise be charged. – quid Apr 2 '19 at 14:44

Your employer cannot write you a check, trusting you to put it in your HSA, and avoid any tax.

When your employer sets up an HSA for you, there is nothing special about that HSA that is any different than an HSA that you would set up yourself. Your employer could take the money that they deduct from your paycheck, add in any amount that they want to throw in, and send it directly to your own personal HSA that you set up yourself through your local bank. However, in my experience, employers generally don't do this; if the employer allowed it, then they would need to keep track of where everyone has their HSA and send lots of money to lots of different places, and also differentiate this from all the different bank accounts that they are direct depositing regular payroll.

Instead, it is easier for the employer to work with one bank/custodian to handle every employee's HSA contributions. Often, this is a firm that specializes in employee benefit services and is part of a package of services that they are handling for the employer.

If you don't like the HSA that your employer has set up for you, you can set up a second HSA that you like better. Just be aware that your annual HSA contribution limits are total; you can't double your HSA contribution limit by opening up another HSA. You are, however, allowed to transfer money from one HSA to another, so you could periodically move money from your employer's HSA to another one of your choosing. (There are specific rules about these transfers that need to be followed, of course.)

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