Like most businesses, CrossFit box owners providing health care benefits to employees find their budgets strained by spiraling medical insurance premiums. One solution, the Health Savings Account (HSA), which was created as part of the 2003 Medicare Act, is a relatively affordable—and tax efficient—alternative to traditional managed-care group plans.

The HSA is the more flexible successor to the Archer Medical Savings Account, which was introduced several years ago to help employees of small businesses get health coverage. Available since January 1, 2004, HSAs are being offered by a growing number of banks and insurance companies. While experiences among employers vary, early adopters of HSAs have generally found the plans to be effective in lowering or arresting health benefit costs.

An HSA may be opened by anyone who has a qualified health insurance policy with an annual deductible of not less than $1,300 for individuals, or $2,600 for families. A box owner may choose to offer a high deductible health plan (HDHP) to coaches and staff, or employees can be encouraged to sign up for policies on their own. Employers are permitted to contribute to the accounts of individual employees or may offer staff incentives to put money in themselves.

Since HSA funds are intended to pay for out-of-pocket medical expenses not covered by insurance, participants are permitted to make tax-exempt yearly contributions equivalent to the annual deductible of the insurance policy, up to a maximum of $3,450 for individuals and $6,900 for families in 2018. HSA enrollees age 55 or older may make additional contributions of up to $1,000 a year. The accounts are owned by the individual and are fully portable from job to job.

The tax advantages of the HSA are substantial. Contributions to and withdrawals from an HSA are tax-free, provided the funds are used to pay for qualified medical expenses. The investment earnings within the account also grow tax-free.

Any funds left over in an HSA at the end of the year can remain in the account, and the participant may start all over with contributions the following year. Enrollees who use little of the money in the account while continuing to make deposits could end up with substantial savings in retirement. Prior to age 65, non-medical distributions are taxed as part of gross income and are subject to a 10% penalty. After age 65, however, account holders are permitted to withdraw funds from an HSA for non-medical reasons by simply paying the income tax due.

Like any insurance plan, HSAs may not be the best choice for everyone. Lower income employees may find it difficult to contribute the funds necessary to cover the insurance deductible. And employees who use medical services frequently, such as young families or people with chronic health conditions, would derive little benefit from the tax advantages associated with the HSA. For these types of employees, traditional managed-care plans may be preferable. To meet the varying needs of coaches and staff, box owners may want to provide several health insurance options.

When launching an HSA plan as a benefit offering, it is essential that practice managers explain to employees how the accounts work. Some employees may initially balk at the high insurance deductibles associated with HSAs, but may be persuaded to sign up if the box owner(s) assumes part of the cost. Higher earning staff, in particular, may be drawn to the considerable tax breaks provided by the HSA. Over time, employees should come to appreciate the advantages of having greater control over their health care spending, and possibly seeing their account balances grow through regular saving.

If you’re like most taxpayers, you have no clue about the most effective tax strategies for these financial vehicles - especially if you lack access to expensive accountants and attorneys. Here’s some guidance.

Here are two common situations and innovative solutions that might help.

1.     You are self-employed and want to save tax. You feel you pay too much in taxes and want at least $17,500 of deductions. You are not an employee with a company that offers a 401(k) retirement plan but you still need more deductions than the $5,500 annual contribution ($6,500 if 50 or older) limit for a traditional individual retirement account.

Solution: a solo 401(k), aka an independent, one-participant or family 401(k). Using this vehicle in this case hinges on your being a sole proprietor or operator of the business with your spouse, and have no non-family employees.

Let’s say your spouse works in the business with you and is younger than 50. He or she can contribute up to $17,500 annually to the solo 401(k) plan, and this is called employee salary deferral of up to a full year’s compensation. If your spouse earns $17,500 this year ($18,000 in 2015) he or she can put all of $17,500 into the solo 401k(k) plan.

Assume you are 50 or older and now also contribute a maximum $23,000 (the maximum $17,500 contribution for 2014 tax year plus the $5,500 catch-up amount) employee salary deferral to a solo 401(k) plan. With an eye to even further deductions, you can also kick in the employer contribution - remember, you are both the employee and the employer - of 20% of your net earnings if you are a sole proprietor and 25% if your business is a corporation.

If you are 50 or older by this Dec. 31, you can save up to $57,500 in the solo 401(k), a combination of the employee salary deferral and the employer contribution. For 2015, the total maximum contribution increases to $18,000 salary deferral plus $6,000 catch-up plus $35,000 employer contribution, or $59,000 total.

Additional points:

You can still contribute to an IRA in addition to your solo 401(k) contribution.

Setting up a solo 401(k) can be inexpensive and easy. A reasonably priced independent 401(k) administrator can cost as little as $500 for set up and $500 in annual fees. Brokerage firms can offer lower costs but you then are tied to their investment choices.

If you have non-family employees and want to offer a workplace retirement plan, your normal 401(k) plan may come with potentially higher set-up and maintenance fees. You will also be subject to non-discrimination rules, meaning that you must allow your permanent employees into the plan and that your employer profit contribution must treat all employees - including you the owner - equally.

2.     You want to leave a tax-free legacy. In one excellent example, a retired nurse, married, 75, wants to leave a legacy to her 9-year-old twin grandsons. The most tax-effective strategy: Combine the Multi-Generational (MGIRA) strategy with a Roth IRA conversion.

The MGIRA, aka an extended or stretch IRA, allows you to designate a successor beneficiary to pass on funds you saved for retirement. Converting other kinds of IRAs to a Roth IRA offers many advantages, including eventual tax-free withdrawals of qualified distributions.

We structured a Roth conversion of the nurse’s $385,000 traditional IRA and paid the conversion tax with non-IRA funds. The two grandsons will each get slightly more than $2 million tax-free over their lifetimes in annual checks without ever raiding the principal.

Let’s hope they raise a glass to the grandma who will still be looking after them.

Early in the morning of December 20, 2017, the Senate passed the "Tax Cuts and Jobs Act" by a party-line vote of 51 to 48; (Republican Senator McCain was absent for medical reasons). Irrespective of your political affiliation, most would agree that this legislative achievement is the most sweeping overhaul of the US tax system in more than 30 years.

Naturally, the question we are all asking is “how does this impact me and my family?”

Well, that’s a challenging one to answer because everyone is different, but let’s examine the changes from 30,000 feet. Please remember, however, that this summary is by no means meant to be considered tax advice – you should consult your advisor to determine how it might impact you personally.

Implications for the US Economy?

By almost all accounts, the Tax Cuts and Jobs Act is predicted to raise the federal deficit by billions of dollars – and perhaps as much as $2 trillion over the next 10 years.

The big question is how much economic growth the new bill will create, thereby offsetting the increase to the federal deficit. The short answer is that no one knows with any certainty. Here are three perspectives:

• The Congressional Budget Office's analysis suggests that the cuts would add $1.4 trillion to the deficit by 2027. That estimate does not include the amount that would be offset by the economic growth spurred by tax cuts.
• Treasury Secretary Steven Mnuchin predicts a “net reduction” to the national debt as a result of the new bill.
• Speaker Paul Ryan told NBC’s Savannah Guthrie that “nobody knows” if the tax bill will create enough economic growth to negate its cost.

The answer is probably somewhere in the middle.

Highlights of the Bill

The bill is complicated and long – at least 400 pages at last count. In addition, many of the changes, especially the personal tax breaks, are considered temporary – meaning they go into effect in 2018 but expire after 2025. The reason for this expiration date is because it allows the Senate to comply with what we might consider odd "reconciliation" rules that block a Democratic filibuster, which the Republicans would not have enough votes to overturn. The good news is that the Republicans have vowed to make the changes permanent – but let’s wait and see what happens – 2025 is a long way away…

Here is a quick summary of other provisions of the tax bill:

• The bill would create a single corporate tax rate of 21%, beginning in 2018, and repeal the corporate alternative minimum tax. Unlike tax breaks for individuals, these provisions would not expire.
• The bill would retain the current structure of seven individual income tax brackets, but in most cases, it would lower the rates:
• the top rate would fall from 39.6% to 37%;
• the 33% bracket would fall to 32%;
• the 28% bracket to 24%;
• the 25% bracket to 22%;
• the 15% bracket to 12%; and
• the lowest bracket would remain at 10% and the 35% bracket would remain unchanged.
• The bill would raise the standard deduction to $24,000 for married couples filing in 2018 (from $13,000 under current law), to $12,000 for single filers (from $6,500), and to $18,000 for heads of household (from $9,550). These changes would expire after 2025.
• The bill would end the individual mandate, a provision of "Obamacare" that provides tax penalties for individuals who do not obtain health insurance coverage, in 2019. While the mandate would technically remain in place, the penalty would fall to $0.
• The bill would temporarily raise the child tax credit to $2,000, with the first $1,400 refundable, and create a non-refundable $500 credit for non-child dependents.
• The bill would limit the application of the mortgage interest for married couples filing jointly to $750,000, down from $1,000,000.
• The bill would cap the deduction for state and local taxes at $10,000 through 2025.
• The bill would temporarily raise the exemption amount and exemption phase-out threshold for the Alternative Minimum tax – for married couples filing jointly, the exemption would rise to $109,400 and phase-out would increase to $1,000,000.
• The bill would temporarily raise the estate tax exemption for single filers to $11.2 million from $5.6 million in 2018, indexed for inflation. This change would be reversed after 2025. 

Final Thoughts

There are a ton of other changes to the tax bill as well as changes that were proposed in earlier versions that were nixed in the final bill. For example, the original version proposed changes to Health Savings Accounts, but the final version does not.

There were discussions that the traditional 401(k) contribution limits would fall, but the final bill leaves those limits unchanged (currently $18,000 or $24,000 for those aged 50 or older).

The point is that it’s critically important that you consult your advisor to determine how this new tax bill might impact you and your family.