Can self-employed individuals contribute to an HRA or FSA?

Can self-employed individuals contribute to an HRA or FSA?

• A. Yes
• B. No
• C. Only to an HSA
• D. Yes, if they have employees

Answer: (B)

Self-employed individuals generally cannot contribute to a Health Reimbursement Arrangement or a Flexible Spending Account because these plans are employer-sponsored. An FSA is funded through pre-tax payroll deductions and must be offered by an employer with a qualified retroactive benefit plan. An HRA is established and funded entirely by the employer to reimburse employees’ medical expenses. Without an employer to sponsor and fund the plan, there’s no mechanism for a self-employed person to contribute. If you have a high-deductible health plan, you can still contribute to a Health Savings Account as an individual, which serves as a personal tax-advantaged way to save for medical costs.

Self-employed individuals generally cannot contribute to a Health Reimbursement Arrangement or a Flexible Spending Account because these plans are employer-sponsored. An FSA is funded through pre-tax payroll deductions and must be offered by an employer with a qualified retroactive benefit plan. An HRA is established and funded entirely by the employer to reimburse employees’ medical expenses. Without an employer to sponsor and fund the plan, there’s no mechanism for a self-employed person to contribute.

If you have a high-deductible health plan, you can still contribute to a Health Savings Account as an individual, which serves as a personal tax-advantaged way to save for medical costs.