Health Savings Account

Allow me to share information about processing payroll and health insurance in QuickBooks Online (QBO).

The employer contribution to the insurance will show up on the Profit and Loss report since this is a company expense. Then, the employee's deduction will then show up on your liability and not on your payroll expenses since this is not a company expense but is coming from the employee's pay. If you need to set up Health Savings Account (HSA) item for employee contribution, just follow the steps below:

1. Go to Payroll, then Employees.
2. Choose your employee.
3. From Deductions & contributions, tap Start or Edit.
4. Select + Add deduction/contribution.
5. From the dropdown menu select Deduction/contribution type: HSA plans or Type: Pretax HSA or Taxable HSA.
6. Enter a Description(appears on the paycheck).
7. Select how your contribution is calculated. Then enter the amount or percentage.
8. Add an Annual maximum amount.
9. When finished, press Save then Done.

You can check out this article for more details about tracking HSA contributions in QuickBooks Online: Set up a Health Savings Account (HSA) item in QuickBooks Payroll. 

You can also skim through the topics from this link for additional guides while working with QuickBooks or payroll in the future.

Please keep me updated if you have any questions or concerns about processing. I'll be by your side every step of the way. Take care and have a wonderful day.

Thanks for the clarification! I thought I was on the right track but was unsure. The only thing is we do not use QuickBooks to process our payroll. We have another vendor that processes our payroll. I would need to change how the account is reporting in the "Chart of Accounts" currently, it is under an expense, which is incorrect because the company does not contribute to the employee's Health Savings Account; only the employee does. I am still having an issue because I see on our payroll reports that the money is deducted from the paycheck, but I do not see where it is disbursed on the payroll reports.

Hey there - did you ever get a work-around for this? I also don't use QuickBooks Payroll (we use a different vendor and track in QBO). Did you set up an account to record HSA deductions made by employees? Did you use a Balance Sheet account? Thanks!

@user6910 

Record the employee HSA contribution amount to a liability account called "Employee HSA Contribution" or something similar.  When you make the contribution payment, assign the same liability account to the payment. 

Hi,

Yes, I finally figured it out. The payroll company we use lumps the employee HSA contribution and the Health Insurance deductions together, so the reporting differed. It was hard trying to figure out where the money was going. I also had an issue with how it should report on the tax line. I used liabilities/payroll liabilities. 

I'm using QB Desktop Payroll and have the HSA item added to the Payroll item list.  I also have all of the HSA account information.  Is it possible to input the account info and have QB Desktop Payroll transfer the payroll withholding funds to the HSA account when I run payroll?

Hello there, BradBuck.

I'll share information to help you enter Health Savings Account Information (HSA) and let QuickBooks transfer payroll withholding funds directly to the HSA account when running payroll.

QuickBooks Desktop Payroll allows direct deposit of an employee's HSA contribution into their HSA account. With this, you'll need to create another payroll item.

Here's how:

1. Head to the Lists menu, then Payroll Item List.
2. Select Payroll Item, then New.
3. Choose Custom Setup and click Next.
4. Pick Addition, then Next.
5. Select the same account used when creating the HSA item in the Expense account and click Next.
6. Choose None in Tax Tracking Type, then Next.
7. Pick Net pay in the Gross vs. Net window, hit Next, and Finish.

After, proceed to these steps to add the HSA account information of your employees:

1. Go to the Employees tab, then double-click the employee affected.
2. Choose Payroll Info and pick Direct Deposit.
3. Select Use Direct Deposit and Split Payment.
4. Please input the HSA Bank, account, routing number, and the amount to deposit in Deposit Portion of Payment.
5. Enter the employee direct deposit information in Deposit the Remainder.
6. To save the changes, click on OK twice.

Lastly, you can scroll down to Step 2, then step 11 in the QuickBooks Desktop Payroll section for guidance on your next paycheck: Set up a Health Savings Account (HSA) item in QuickBooks Payroll.

Moreover, you can review these resources whenever you want to get a closer look at your business finances:

• Run payroll reports
• Customize payroll and employee reports

Keep us updated in the Community if you have additional questions when managing HSA account or other related concerns in QuickBooks Desktop Payroll. We're always around to help.