Mark has four children under the age of 15.His wife has had a serious health problem that will keep her from working for the next few years.Mark's employer,Megatherium Industries,has moved to a new health insurance plan which involves Megatherium making contributions to an account to which Mark can also make pre-tax contributions.Mark can spend the money in this account on health insurance.The insurance has an $11,600 deductible for Mark's family,so he will be out of pocket over $11,000 before his health insurance coverage starts paying for his family's care.Mark's annual pre-tax salary is $80,000.Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

This is a typical Health Savings Account (HSA) which allows both Megatherium and Mark to contribute pre-tax money to the account, making it an effective way for Megatherium to reduce its overall health insurance expenditures. The high deductible is a characteristic of HSAs, and employees can use the funds in the account to pay for medical expenses until they reach the deductible amount. It is not illegal for family health insurance to be more than 10% of an employee's salary, so option A is incorrect. This is not a flexible spending account under Section 125 of the Internal Revenue Code, which is a different type of account with different rules. Option D about HMOs is not relevant to the question.

Mark Has Four Children Under the Age of 15