About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

LOG IN
LOG IN


Tax-Advantaged Accounts for Health Care Expenses: Side-by-Side Comparison, February 4, 2008 1 (February 4, 2008)

handle is hein.tera/crstax0270 and id is 1 raw text is: Order Code RS21573 Updated February 4, 2008 ACRS Report for Congress Tax-Advantaged Accounts for Health Care Expenses: Side-by-Side Comparison Bob Lyke and Chris L. Peterson Domestic Social Policy Division Summary Health Savings Accounts (HSA) are the newest addition to an array of tax- advantaged accounts that people can use to pay for unreimbursed medical expenses, such as deductibles, copayments, and services not covered by insurance. First available January 1, 2004, HSAs have largely replaced the similar but more restrictive Archer Medical Savings Accounts (MSAs), which never attracted many participants. In addition, people may have access to two employment-based accounts, Health Reimbursement Accounts (HRAs) and health care Flexible Spending Accounts (FSAs). Collectively, these accounts have some features and objectives in common, but they also differ in important respects. Keeping these accounts straight can be difficult, especially when they are discussed informally using different names. This report provides brief summaries and background information about the four accounts and then compares them with respect to eligibility, contribution limits, use of funds, and other characteristics for tax year 2008. The report concludes with a brief discussion of equity and several other issues. It will be updated when changes occur. Brief Summaries and Background Four types of tax-advantaged accounts are permitted under current law for people to pay unreimbursed medical expenses such as deductibles, copayments, and services not covered by insurance: health care Flexible Spending Accounts, Health Reimbursement Accounts, Health Savings Accounts, and Archer Medical Savings Accounts.1 Flexible Spending Accounts (FSA). Health care FSA are employer-established arrangements that reimburse employees for medical and dental expenses not covered by insurance or otherwise reimbursable. They usually are funded through salary reduction 1 For additional general information, see Internal Revenue Service publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, available at [http://www.irs.gov]. Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress