Understanding a Healthcare Reimbursement Account (2010)

By setting aside pre-tax money from your pay into the healthcare reimbursement account, you may later repay yourself for eligible expenses incurred in calendar year that are not covered by insurance. Because your contributions are deducted from your pay before federal income, state income, and Social Security taxes have been withheld, you save on taxes.

Certain over-the-counter drugs and medicines may be reimbursable under your healthcare reimbursement account.

You can find all sorts of information about the account at
http://www.hr.duke.edu/benefits/reimbursement/health.html

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[WorkingAtDuke]

Thanks for posing your question! You're right, there is a 15 percent tax, but with the case of Blue Devil, his taxes also include a 7.56 percent FICA tax and about 8 percent for North Carolina state tax. All those taxes are common among Duke employees. After all the math is done, Blue Devil is left with about $300 in savings.

[johnpfay]

Someone's got to check the math on this video.

$6k taxes on $40k income = 15% tax rate

$5.7k taxes on $39 = 14.5% tax rate

Blue Devil really only saves $150 on taxes by contributing $1000, not $300 as the video shows...