Healthcare Economist September 23, 2024
In the U.S., health insurance premiums are tax deductible–if paid through out of pocket expenses–but out-of-pocket expenses are not. However, there are exceptions to this rule. These include two often-used tax-favored accounts:
- Flexible savings accounts (FSA). These accounts allow employees to set aside a portion of their pretax income to cover qualified medical expenses; however, if the employee does not use these funds by the end of the year, they are forfeited.
- Health savings accounts (HSA). HSAs also allow employees to save pretax income to cover qualified medical expenses, but–unlike FSAs–HSA balances roll over from year to year. While anyone with a qualified plan can enroll in an FSA, only employees who enroll in a high-deductible health plan (HDHP)...
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