Health Care

Health Flexible Spending Arrangements

Amounts you contribute to accounts under your employer's Flexible Spending Arrangements (FSAs) are not taxed in 2010. You can access funds any time during the year to pay for health insurance premiums as well as medical costs and other expenses not covered by insurance, although they must qualify as a deductible medical expense.

Your company's plan determines contribution terms and limits. Funds not used during the year, or by the end of any grace period the plan may offer, are lost.

Health Savings Accounts

Health Savings Accounts (HSAs) are designed for individuals covered by a high-deductible health insurance policy and are not covered by Medicare. They offer a number of tax advantages: contributions within certain limits are tax deductible, withdrawals to pay for
qualified medical expenses are tax-free and earnings are tax-deferred. However, withdrawals for non-medical expenses are both taxable and subject to a 10% penalty unless they are made when the individual is age 65 or older, or disabled.

You and your employer can make contributions, and the total maximum contribution is $3,050 for self-only coverage ($4,050 if age 55 or older) and $6,150 for family coverage ($7,150 if age 55 or older and $8,150 if spouse also is age 55 or older). There also is a $1,000 catch-up contribution if you are age 55 or older by the end of the year.