What Is a Flexible Health Spending Account?
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What you should know about Flexible Health Spending Account?
Many employers offer health insurance plans that include flexible health spending accounts (HSA). These accounts allow an employer or an employee to put aside part of the employee’s paycheck in a separate account before it is taxed. This money is called pre-tax income. There are specific rules for how this money can be spent. For example, HSA money can be spent on prescription medications, but not on nonprescription medication, such as over-the-counter medications.
There are different kinds of flexible health spending accounts. Some are designed for children, other dependents, or specific health conditions. Each of these accounts has its own guidelines regarding which expenses can be purchased with HSA money.
A flexible health spending account is actually a checking account, even though it is called a savings account. When you open an HSA, you will be issued checks for that specific account as well as a debit card to use on health related expenses.
Can I Get a Flexible Health Spending Account?
Your employer must offer an HSA as part of an overall health insurance benefits package in order for you to be able to get one. Many employers will match or exceed the employee’s contribution to the account. For instance, if an employee contributes $1 direct deposit from their paycheck, their employer will deposit and equal or greater amount.
Are There Rules for a Flexible Health Spending Account?
There are definite rules regarding which medical expenses, products, and other items can be charged to a flexible health spending account. Your employer should provide information on these for you. Common rules about HSAs include:
- HSA accounts must be renewed annually or changed if the health insurance plan changes
- Health care deductibles, co-pays, and your share of visits to doctor’s and dentist’s office can all be expensed to your HSA
- Ineligible expenses include orthodontia, cosmetic surgery, vitamins, herbs, supplements, prescription drugs from another country, and counseling
Do I Need a Lawyer?
Yes. HSAs have specific tax implications for the employee, so it important to understand what these implications are. A tax lawyer can explain your plan to you.
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Last Modified: 02-21-2017 01:19 AM PST
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