Do you have a high deductible health plan (HDHP)?

Choosing a healthcare provider is a little bit more of a hassle now that you're self-employed. Luckily, there are places like Healthcare.gov to help you enroll in a plan. When you do, you'll want to find out first if your insurance plan is HSA-eligible, whether you plan on opening a new HSA or using one from your previous employer.

In order to qualify to participate in an HSA, you'll need to meet the following criteria:

• You don't have other medical coverage like Medicaid, Medicare or even FSA coverage through your spouse's' plan
• You're enrolled in an HSA-qualified high deductible health insurance plan

Contributing to an HSA as a sole proprietor

Since you file taxes on your personal tax return, you're essentially treated like someone making HSA contributions on their own. And so you're able to deduct some of your contributions on your personal income tax return.

The good news is, as long as you made a profit during the tax year, you can file the deduction. The maximum is $4,300 (for those participating in the HDHP as single and $8,550 for those participating in the HDHP as family) or an extra $1,000 if you're 55 and older. The caveat is that you can't put more in your HSA than your net self-employment income.

Some traditional employees can contribute to their HSA on a pre-tax basis, provided their employer's plan allows for this and they are eligible to participate. However, if you're self-employed, you don't have that same luxury. You would contribute after-tax dollars to your HSA and then do a line item deduction in your Schedule C. To make sure you're getting everything right, it's best to consult a tax professional on these matters.

If you have an LLC...

As a single member LLC, you're not going to treat your HSA much differently than a sole proprietor. Though, if you have employees, you may be able to implement a plan that can allow them to make pre-tax contributions. This is what's known as a "cafeteria" or "125" plan.

The downside is that you as the owner can't participate. You can only contribute after tax dollars and it's counted towards your personal taxes. As in, you or your partner(s) can still take a deduction on a personal tax return. That means whatever you contribute towards your HSA will reduce your adjusted gross income. Just like a sole proprietor, you can only claim this deduction if you actually made a profit.

Keeping (or opening) an HSA is extremely beneficial for everyone, especially self-employed folks. Since contributing to one isn't that much different than what you've been doing, how hard can it be? As long as you're diligent about your paperwork, you can easily save on qualified medical expenses.

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