Health Savings Accounts (HSAs) combine high deductible/lower premium health insurance with a tax favored savings account set up to help employees manage the increase in out-of-pocket healthcare expenses usually associated with a high deductible plan. Both employer and employee can contribute, tax-free, to the savings account. Money in the savings account can help pay the deductible and other qualified medical expenses, tax free. Once the deductible is met, the insurance starts paying. Money left in the savings account earns interest, tax free and is the employees to keep forever, even if they change jobs or medical plans.
Health Reimbursement Accounts (HRAs). This tax favored reimbursement account is set up and funded solely by the employer and is geared to help employees pay for high deductibles and other out-of-pocket healthcare costs. Employees are reimbursed for expenses upon submission of EOB proof. Any monies left in account rolls over to the next plan year.
Flexible Spending Accounts (FSAs) are a cafeteria plan under Section 125 of the tax code. It is a tax favored savings account funded solely by the employee through regular pre-tax payroll deductions. The funds (account) can be withdrawn tax-free to pay for eligible medical, dental, vision, prescription and dependent daycare expenses. Employees elect how much they want withdrawn from each pay period, which can be changed annually or upon a qualifying event such as marriage or divorce. The average working employee in America spends more than $1,000 annually on these types of benefits. By participating in a FSA, an employee's taxable income is reduced, which increases the percentage of pay they take home.
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Employee Group Benefits
HSAs, HRAs, FSAs