There have been millions of words (and seemingly just as many opinions) written and spoken about the Affordable Care Act, but how much do you really know about Health Reimbursement Accounts (HRAs)? And for that matter, how exactly do HRAs differ from Health Savings Accounts (HSAs)? Amid everything, of course, you need to navigate a labyrinth of IRS rules & regulations governing withdrawals, participation and funding. For employee and employer alike, it can be a sometimes murky alphabet soup of health-insurance options, says Kevin F. McCormack, president of Pension Parameters Financial Services, Inc. There are differences as well as similarities, he says, and one aspect of HRAs is that an employer’s contributions are not included in the taxable income of employees. No federal income taxes or employment taxes are payable on HRA contributions. Employee withdrawals from HRA accounts are tax-free if they are reimbursements for qualified medical expenses.
HEALTH REIMBURSEMENT ACCOUNTS
