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HSA

A Health Savings Account, not to be confused with a Flexible Spending Account, is a pre-tax account that can be offered in conjunction with a Qualified High Deductible Health Plan. HSAs can be funded by employer and employee contributions, and all contributions remain in the employees’ name (Think of HSAs like an IRA for medical expenses). Employees who are enrolled in high deductible health plan can set aside pre-tax payroll contributions in a HSA and then withdraw them to pay for qualified medical expenses. As with most tax breaks, the IRS imposes rules/limits on deferrals and distributions from HSAs. Therefore, employers should understand the regulations before offering a HSA.