This Spotify Podcast and/or WordPress Blog understandS you are concerned about how you may pay for your health care costs in the future and would like more information on some of the tax incentive programs available. Congress has designed several tax-favorable programs aimed at helping individuals offset health care costs. They include:
(1) health savings accounts (HSAs);
(2) medical savings accounts, including Archer MSAs and Medicare Advantage MSAs;
(3) health flexible spending arrangements (FSAs); and
(4) health reimbursement arrangements (HRAs).
Assuming you are an eligible individual, an HSA may receive contributions from you or any other person, including an employer or a family member, on your behalf. Contributions, other than employer contributions, are deductible on your tax return whether or not you itemize deductions. Employer contributions to your HSA are not included in income. Distributions from an HSA that are used to pay qualified medical expenses are not taxed.
Again, assuming you are an eligible individual, an Archer MSA may receive contributions from you and your employer, but not both in the same year. Your contributions are deductible whether or not you itemize deductions. Employer contributions to an Archer MSA are not included in income and distributions from an Archer MSA that are used to pay qualified medical expenses are not taxed.
A health FSA may receive contributions from an eligible individual. Employers may also contribute. Contributions are not includible in income and reimbursements from an FSA that are used to pay qualified medical expenses are not taxed.
Finally, an HRA is limited to receiving contributions from an employer only. Employees may not contribute. Contributions are not includible in income and reimbursements from an HRA that are used to pay qualified medical expenses are not taxed.
The rules and eligibility requirements for each type of medical plan are different and can change as tax laws change. Employers have complete flexibility to offer various combinations of benefits in designing their plan.
Please call me at your earliest convenience to set up an appointment so we can discuss the various alternatives to see if one of them may be right for you.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 04302021 320-503)