Health & Benefit Accounts

A tax-advantaged account paired with a high-deductible health plan (HDHP) that lets you save for medical expenses. It offers a rare triple tax advantage: contributions are tax-deductible, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free. Unlike a flexible spending account, the funds roll over year to year and stay with you, and after age 65 you can withdraw for any purpose (paying only income tax, like a traditional IRA).

An employer-sponsored account that lets you set aside pre-tax dollars from your paycheck to pay for eligible healthcare or dependent care expenses, lowering your taxable income. Because contributions are pre-tax, you save on the costs you’d pay anyway, but it generally follows a “use it or lose it” rule, so unspent funds may be forfeited at year-end (some plans allow a small carryover or grace period).

An employer-funded and employer-owned benefit that reimburses employees, tax-free, for qualified medical expenses and sometimes health insurance premiums. Only the employer contributes (there are no employee paycheck deductions), and the employer sets the annual allowance and rules. Because the employer owns the account, unused funds generally stay with the company when you leave, and depending on the HRA type, balances may or may not roll over year to year.

The maximum amount the IRS lets you contribute to a flexible spending account each year, set annually and applied per employee (so spouses with separate employers can each contribute up to the limit).