Expert Q&A Archive
What does an employer's health savings account cover?
May employers set up a certain fund for you to use as a health savings account for the year. Does surgery plus your prescriptions all come out of that one fund?
Gail V. Marquet:
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There are health savings and health reimbursement accounts. With health reimbursement accounts, a certain dollar amount is deposited each pay period. These funds can be used for any medical expense incurred during the year, but if the funds are not exhausted at the end of the year they are "lost." The employee doesn't have any further claim on them. With Health savings accounts, the funds set aside each pay period can be used for any medical expense. These accounts are set up for employees with high deductibles ($2000 or more annually). At the end of the calendar year, any unused funds can be rolled into the following year. It can become a forced savings fund.
Anne Delle Donne:
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Yes, employers can help you set up and even fund your HSA account. Yes, surgery and your prescriptions can come out of your HSA account (assuming you have deposited enough cash to cover the expenses). There is a broad definition of what will qualify as an "eligible medical expense" that will come out of your HSA completely tax-free. Generally it also covers those medical expenses that are typically not covered by PPO or HMO health plans (such as dental and vision).