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New law will let Georgia state employees make pretax payroll contributions to health savings accounts, officials say
Summary
HR director Donald Cronin and lawmaker Derek McCollum told the committee the law (HB422) allows pretax payroll contributions to HSAs for employees in high-deductible plans, yielding tax savings for employees and payroll-tax savings for the state when implemented.
State officials told the House Insurance Rate Study Committee on Aug. 15 that a law enacted this year (HB422) will permit Georgia state employees enrolled in a high-deductible health plan to make pretax payroll contributions to health savings accounts (HSAs) beginning Jan. 1, 2026.
Donald Cronin, HR director for the Capitol, said HB422 equalizes payroll-treatment for HSAs and is expected to lower annual costs for employees who choose a qualifying high-deductible plan. Cronin gave an example showing a family switching from a traditional plan to a high-deductible plan with payroll contributions could save roughly $4,100 a year in premiums and avoid payroll taxes on pretax contributions.
Why it matters: The change shifts some health-cost choices toward a tax-advantaged savings-and-investment vehicle. Cronin said the state and employees both avoid payroll taxes when contributions are taken pretax through payroll, creating direct savings for state finances as well as the participating employees.
Cronin said the law was signed into law May 14, 2025, and becomes effective no later than Jan. 1, 2026; state agencies and payroll systems will need implementation time. He noted the policy is not suitable for every employee and that lower-income workers will see smaller gains, but the measure is expected to provide net savings for many state employees and reduce employer-side payroll tax costs.
Ending: Committee members thanked the witnesses and noted the law could be a model for local governments and school systems that already participate in different payroll-tax regimes.
