Question

Briefly explain the type of employee that would be a good fit for a High Deductible Healthcare Plan. What are the three tax benefits of a Health Savings Account?

Answer 1

The type of employee that would be a good fit for a High Deductible Healthcare Plan will be the employee who rarely use his/her health benefits. Employees who are not on expensive medication are also a good fit. Thus employees who do not have chronic illness are also good fit.

Three tax benefits of Health Savings Account are:

1. Contributions are tax deductible and this reduces a person’s federal income taxes owed.
2. Assets in Health Savings Account grow tax free at the federal level.
3. Withdrawals will not be taxed if the amounts are used for qualified medical expenses.