What is a medical account account?
Health reimbursement is a flexible arrangement of expenditure available to American workers that allow them to avoid certain taxes from the money they spend to meet health expenses, which otherwise will not pay otherwise by health insurance. The health account, which is sometimes confused on a medical savings account, accumulates funds only during the calendar year and must be used for expenditures this year. On the other hand, medical savings accounts are usually available only to those who have highly deductible plans and are structured to accept contributions and make payments in the long term. The accounts of medical reimbursement are one of the two types of flexible accounts of expenditure allowed by a section of 125 US Tax Code; The second is used to pay dependent care expenses.
a person must be employed to participate in the Medical Payment Plan because the only cause of dollars without tax in the plan isthrough the wage list. Participants may decide to deduct part of their compensation from their remuneration based on taxation and accumulated on a special, non -way account. The elections are only good for the current calendar year and as soon as they have begun, the deductions cannot be changed or stopped, except in the case of emergency or termination of employment. The employer is allowed to reduce the annual level of contributions and the Regulation on internal income (IRS) prohibits the contribution of more than $ 2,500 (USD) in one calendar year. The entire amount of the annual contribution is available to the participant immediately after the first deduction, which is a pre -financing function that sometimes generates controversy.
medical reimbursement can be used to pay qualified health expenditures, which are not covered by health insurance or otherwise return. For example, it can be used to pay a deduction for a doctor's visit to the office and for recipes, as well as for treatment expenses that do not apply to a specific health plan such as dental, andCup or chiropractic service. The medical payment account cannot be used to pay for over -the -counter (OTC) medicines, nor can it be used to pay for cosmetic items, vitamins or nutritional supplements.
Employers sometimes manage their own programs of medical reimbursement, but in most cases the service offices are managed for a relatively small fee. Participants have access to their funds through the process of claims at which the costs are paid and then the plan is returned, but many plans now offer a debit card that participants can use at the time of purchase. In both cases, they must present proper documentation for all demanding expenses.
Health accounts of medical reimbursement can only be used to pay qualified medical expenditures incurred in the same year, when the funds were deducted from the CO Compensation participant. IRS allows each year to submit claims for participants, but any means that have not used is a function that is commonly referred to as' afterto use or lose ". Those who are eligible to participate in the Medical Payment Plan is therefore recommended to carefully estimate their covered expenses and do not contribute more than they expect to be able to use.
Medical payment accounts are sometimes controversial due to pre -financing, a function that allows the participant to access the full amount of annual elections before they actually accumulate the account. It is said that employers are disproportionately threatened, because participants who exhaust their medical reimbursements at the beginning of the year may subsequently terminate their employment and may not be obliged to repay the employer in advance. The pre -financing function is the only way to provide the full advantage of the plan for participants, which will arise, however, the high health costs at the beginning of the year.
In order to help balance the potential problems of preliminary financing, employers are deprivedReference, which is more than 7.5% of deductions. In addition, any unused funds for medical reimbursements will return to the employer's treasury, which is currently estimated to be about 14% of the total deductions. Finally, employers are allowed to impose a limit to contributions below $ 2,500 USD IRS. There is still a possibility that a small employer can actually lose money due to preliminary funding of the medical reimbursement program, but in the vast majority of cases employers get much more than they could lose due to preliminary financing.
Employees participating in medical payments also tend to benefit. Participants of the highest income tax group who contribute maximum resistant can save more than $ 750 in federal income taxes. Thanks to these benefits, participation in medical reimbursements is a valuable possibility for employees and employers.