WASHINGTON--Eagerly awaited guidance from the Treasury Department released Tuesday clarifies how flexible spending accounts and health reimbursement accounts can be offered to employees enrolled in health savings accounts linked to high-deductible health insurance plans.

Under Revenue Ruling 2004-45, FSAs, which typically are funded through employees' pretax contributions and HRAs, which are funded by employers, can be used by employees in HSAs for reimbursement of medical expenses above the health insurance plan deductible. The minimum annual health insurance deductible in an HSA arrangement is $1,000 for individual coverage and $2,000 a year for family coverage.

Limited purpose FSAs and HRAs--arrangements that limit reimbursement for vision care, dental care and preventive care services--also could operate alongside HSAs.

Additionally, employers offering HSAs can contribute to an HRA that would provide reimbursement of health care expenses after an employee retirees.

Employers who already have HRAs could set up HSAs without employees losing balances that have accumulated in the HRAs. For this to be allowed, though, funds could not be withdrawn from these so-called "suspended" HRAs while the employee was contributing to the HSA. However, the accumulated HRA funds would be available for expenses incurred after the employee ended participation in an HSA, such as when the employee switched to another health care plan offered by the employer. Such arrangements, benefit experts said, are likely to be rare.

The guidance ends long-standing uncertainty about the interaction between HSAs and FSAs and HRAs.

"It is good news in the sense that the clarification resolves that uncertainty," said Henry Saveth, an attorney with Mercer Human Resource Consulting in New York.

Treasury Department officials earlier sent out signals that they believed the 2003 federal law creating HSAs severely limited situations in which HSAs could be offered alongside FSAs and HRAs.

Some benefit experts hoped for even greater flexibility in which FSAs and HRAs could have been used by employees for immediate, predictable expenses, such as prescription drugs, while employees could build up funds in the HSA for major, unexpected expenses.