How do employer contributions to a Health Savings Account (HSA) affect taxes for the insured?

Employer contributions to a Health Savings Account (HSA) are not included in the taxable income of the insured. This means that when an employer makes contributions to an employee's HSA, those funds do not count as taxable income for that employee for the year in which the contributions are made. Consequently, this tax advantage can lead to significant savings for employees as they are able to save money on their overall tax liability.

The tax benefits associated with HSAs are designed to encourage saving for medical expenses. Not only do the contributions grow tax-free, but distributions from the HSA used for qualified medical expenses are also tax-free. This structure makes HSAs an advantageous financial tool for managing healthcare costs while allowing individuals to circumvent additional tax burdens.

In essence, the correct answer underscores the tax-exempt nature of employer contributions to HSAs, enhancing their appeal as part of employee benefits packages.