Government Guidelines for Health Care Reimbursement Plans

The number of available health care reimbursement plans can be intimidating. However, it's vital to your financial standing and peace of mind that you choose the right one for you and your family.

Health Savings Accounts

• According to the Internal Revenue Service (IRS), a health savings account (HSA) is a tax-exempt trust or custodial account that allows you to use funds contributed by you and your employer to reimburse your medical expenses. Any distributions you take are tax-free, as long as you use these funds to pay for a qualified medical expense.

Flexible Spending Arrangement

• The IRS states that a health flexible spending arrangement (FSA) is an employer-sponsored benefit your employer may offer along with other benefits. You can typically fund it through a voluntary salary reduction by selecting an amount to deduct from your paycheck. Your employer may also choose to contribute. No taxes are withheld from your FSA contributions.

Health Reimbursement Agreement

• Only an employer can fund a health reimbursement arrangement (HRA), according to the IRS; the employee may not contribute to this plan through a voluntary salary reduction. You can withdraw funds from this account tax-free if you use the distribution to pay for an eligible medical expense. The HRA can be used with other health reimbursement plans, including the HSA.