The HCSP is a tax-free account. Contributions and reimbursements* are not reportable on the employee's state or federal income tax returns.

FICA: Employers do not pay FICA taxes on amounts contributed to the Plan.

W-2: Employers are not required to report contributions on a W-2.
Important! The HCSP should not be reported as a Health Savings Account contribution (distributed code W) because there is different tax reporting requirements for that plan.  


Exception: If HCSP participant dies and the account is inherited by an non-spouse or non-dependent beneficiary, reimbursements are taxed as ordinary income. MSRS sends the beneficiary a 1099-MISC. Reimbursements to a spouse or legal tax dependent are tax-free and therefore, not reported.