“Pre-tax” contributions to health savings accounts (HSAs) can only be made through a cafeteria plan. Since federal tax rules prevent “self-employed” persons from participating in cafeteria plans, this means that any business owners considered “self-employed” under the tax code cannot make pre-tax contributions to HSAs in the same manner as “regular” employees.

Business owners barred from participation in cafeteria plans (and therefore from making contributions to HSAs) include:

• Sole proprietors of sole proprietorships
• Partners of partnerships
• Employees of LLCs
• Shareholders of S-Corporations owning more than 2%
• Any children, parents, and grandparents of shareholders of S-Corporations owning more than 2%)

Please note that none of this prevents these business owners from establishing HSAs or making contributions to HSAs. It just means that they will have to establish and make contributions to HSAs on their own in the same “after-tax” manner as any typical HSA account holder (which are tax-deductible in their own right).