Thank you, @BelknapPoint . You see it the same way I do.
I understand, @cptofthehouse , that some things are not considered “fair” by some people and that lines have to be drawn—but that characterization applies to drawn lines that people don’t like but that are applied consistently. One that I can think of is that people who invest in houses to rent out and plan to sell the houses to fund their retirement do not like that their chosen retirement investment vehicle negatively affects their financial aid determination.
But the issue I raise is wholly different. FAFSA is plain wrong in its treatment of HSAs. Either an HSA is income or it’s not. The rule cannot be applied differently based on the method through which HSA contributions are deducted from income to create AGI. Self-employed people do not get paychecks from which HSA contributions can be deducted, so we have no choice but to take the income adjustment on our 1040.
It’s also a matter of age discrimination. Many older workers (50+) who lost jobs in 2008 or 2020 due economic downturns never were able to be rehired and therefore had to make a living through sole proprietorships. Independent contractors are disproportionately represented among older workers.
@thumper1 Choice has nothing to do with it. Corporate employees who have HSAs CHOOSE whether and how much to contribute. It is deducted from their paychecks on a pretax basis.