An Employer's Guide to Health Saving Accounts

Larry Grudzien, J.D., LL.M.
August 8, 2006

The following provides you, as an employer, with information about Health Savings Accounts (“HSA”) under Code Section 223. You should read this explanation to evaluate whether HSAs are either an alternative to, or in addition to, health flexible spending accounts (Health FSAs) under Code Section 125 or Health Reimbursement Accounts (“HRA”) under Code Section 105(h).

To fully understand the requirements of these new accounts, the following discusses its terms and its advantages and disadvantages over Health FSAs and HRAs in a question and answer format. In addition, a chart comparing both Health FSAs and HRAs with HSAs is included at the end of this explanation.

It is important to remember this explanation is not intended to serve as a substitute for the advice of your lawyer, accountant or other personal tax or financial advisor.