What does it mean to make a "post-tax" contribution? What does the tax payer need to do when filing their income tax return?
“Post-tax” refers to contributions that the accountholder or anyone other than their employer makes directly to the accountholder’s HSA via a check or an online transfer of funds. It is called post-tax because the funds come from income that has already been earned and taxed and is in a personal account. The IRS allows post-tax contributions to be deducted from the accountholder’s gross income to come up with their adjusted gross income. This means that the tax payer effectively does not pay any income taxes on the amount that is contributed to the HSA. This is sometimes referred to as an “above the line” deduction because the taxpayer subtracts the amount from their income whether or not they itemize expenses after calculating their “adjusted gross income”. In other words, the HSA deduction comes off gross income dollar for dollar which is a much better savings than itemizing medical expenses, below the line.