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Tax-Free Bill of Health

Health-care accounts with tax benefits
January 1, 2005
URL: http://www.entrepreneur.com/article/74860

Tax-advantaged health-care spending accounts are proliferating--and that means more opportunities to save on taxes as well as more ways to help pay for health costs. Here's a look at how each one stacks up.

Only employers can contribute to the accounts, and these contributions are not taxable to the employee. Employers can design an HRA so that when employees leave the company, they forfeit whatever remains in the account. "This means employers have more control and flexibility with an HRA compared to an HSA,' says Joe Walshe, principal at accounting firm PricewaterhouseCoopers' HR Services in Washington, DC.

You'll want to consider the tax benefits of each of these plans and take advantage of the ones that best fit your business' needs.