Question

In which of the following can employers and employees deposit pretax wages to pay for noncatastrophic medical expenses?

1) health maintenance organizations
2) health benefits funds
3) health savings accounts
4)eferred savings plans

Answer 1

Employees can deposit pretax wages into Health Savings Accounts (HSAs) to cover noncatastrophic medical expenses. HSAs are tax-advantaged and meant for those with high-deductible health plans, different from fixed-payment HMOs or insurance like pension and deposit insurance.

Step-by-step explanation:

Employers and employees can deposit pretax wages to pay for noncatastrophic medical expenses in Health Savings Accounts (HSAs). HSAs are designed for individuals with high-deductible health plans, allowing them to save money on a pre-tax basis to pay for qualified medical expenses. Contributions to an HSA reduce taxable income and can be withdrawn tax-free when used for eligible health care costs. This contrasts with Health Maintenance Organizations (HMOs), which provide health care paid for at a fixed amount per person enrolled, and with pension insurance and deposit insurance, which serve different purposes entirely.