Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

Valued Pioneer
Posts: 3
Registered: ‎10-28-2017
Accepted Solution

Small Business HSA and Single Member LLC

Hey all,

I just started my own single-member LLC to work as an independent contractor in consulting. I would like to set up a pre-tax Health Savings Account, but I'm not sure if that's possible for a single-member LLC. I know that I could do after-tax dollars and take it as a deduction on my personal income tax. Additionally, I know I have to get a high deductible/high OOP max health insurance plan, which I'm okay with since I'm only 26 and healthy. If I can't take a pre-tax health plan, what are the advantages of getting one anyway compared to just putting money aside.

Trusted Council Member
Posts: 6,191
Registered: ‎02-23-2016

Re: Small Business HSA and Single Member LLC

Hi Jen,



So when you own a business you cannot make pre-tax contributions to a health savings account.  However you can open one for yourself (provided that you have a high-deductible health plan) and you can make after-tax contributions.  Your contributions are deductible directly on your Form 1040 as you already know.


For you a high-deductible health plan means you'll have minimum essential coverage and won't have to pay the penalty for not having insurance so long as you choose the right plan.  The HDHP you enroll in must provide 3 primary care visits per year and offer preventive care without using your deductible, so that's what you'll want to look for.  Other than that, for as long you are under 30 years of age and the plan meets the coverage requirements I just mentioned you'll meet the minimum essential coverage requirement with the HDHP and you won't have to look at the marketplace or anything else to have the required coverage under the Affordable Care Act.




Senior Tax Advisor (Tampa, FL)