Posted on December 07, 2005 at 16:48:22:
Health savings accounts, built with pretax dollars and tied to a high-deductible health insurance policy, have been promoted mostly as a benefit for individuals. The money in the account remains tax free if used for medical expenses and can grow from year to year; at 65 or retirement, it can be tapped tax free for anything.
Now companies are finding benefits in this system, savings on taxes and on paperwork. Many companies offer HSA’s as an option along with regular health insurance. The company generally covers the lower premiums of high-deductible coverage and also contributes to the HAS. Both payments are deductible to the company. The savings in paperwork come when health expenses are disbursed via a dedicated credit card or checking account.
By next year, high-deductible medical plans set up with HSA’s won’t pay for prescription drug costs until the deductible is met, but those for preventive care will still be covered, the IRS says.