Which account is specifically designed to allow employers to allocate funds for employee healthcare costs?

The account that is specifically designed to allow employers to allocate funds for employee healthcare costs is a Flexible Spending Account (FSA). This type of account enables employees to set aside pre-tax dollars to cover eligible medical expenses, which can include out-of-pocket costs like deductibles and co-pays.

Employers often offer FSAs as part of a benefits package to help employees manage their healthcare expenses more efficiently. The funds contributed to an FSA are not subject to federal income tax, which can save employees money on their tax burden while allowing them to cover necessary healthcare costs. It is important to note that FSAs typically have a “use-it-or-lose-it” policy, meaning that any unspent funds at the end of the plan year may not roll over.

In contrast, other types of accounts like health savings accounts (HSAs) are individual accounts that require high-deductible health plans for eligibility, and retirement accounts focus on saving for future retirement needs rather than immediate healthcare expenses. Trust accounts are legal entities used for a variety of financial purposes, but they are not specifically designed for healthcare funding in the context provided.