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Can I pay for health insurance with pretax money?

Two basic options exist for using pretax money to help cover health care costs. The health savings account (HSA) which is tied to a consumer-driven high-deductible insurance plan, and the flexible spending account (FSA) which complements your primary insurance plan. The health savings accounts allow you to put aside money in an IRA type account to be used as needed for medical expenses. Any unused money from one year would be available the next year through a roll-over. Any interest you earn from the HSA is also tax free. The FSA is pretax money put aside to cover medical expenses. You must determine what you will spend on medical expenses at the beginning of the insurance year. As you incur expenses, you draw from the FSA but any unused funds at the end of the year are forfeited. Some employers may also allow you to pay for premiums using pretax dollars.

Dr. Michael Roizen, MD
Internal Medicine
Absolutely! That is as long as you have a flexible spending account (FSA) or health savings account (HSA). In fact, your employer may even help you set one up (they are becoming almost as popular as Taylor Swift!). Both accounts allow you to put aside pre-tax dollars to pay for health expenses, but here’s the catch: at the end of the year, any money left over in your FSA vanishes (think of it as ‘use it or lose it’ type of deal). HSAs, on the other hand, let you keep your moolah in the account year after year -- and it can even accrue interest, without taxing it!

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.