Ways to save! HRAs and HSAs

With my Health Savings Account, tucking money away for medical expenses is easier!

HRAs AND HSAs

An HRA is a Health Reimbursement Account and an HSA is a Health Savings Account (see definitions below).   Both are designed to encourage us to make wise decisions regarding the use of health care services – especially if you get the unused dollars!  These accounts are convenient, because they are deducted automatically, similar to health insurance premiums.  Employees can typically access claim detail and balances online.

Health Reimbursement Account (HRA):  Employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company’s standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free. The employer may provide in the HRA plan document that a credit balance in an employee’s HRA account can be rolled over from year to year like a savings account. The employer decides if the funds are rolled from year to year and how much rolls over (which can be either a flat amount or a percentage).

Health Savings Account (HSA): An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, which include most medical care such as dental, vision and over-the-counter drugs.

HRA vs. HSA

HRA

HSA

  • HRAs are employer funded only
  • Money can be rolled over year to year if the employer chooses
  • Funds deposited and dispersed are tax deductible to the business and tax free for the employee
  • Any qualified medical expense can be reimbursed
  • There is no limit as to how much can be reimbursed

 

 

  • Funds are completely employee owned
  • Money rolls over year to year
  • Funds can be used to pay for any qualified medical expense on a tax-free basis
  • There are limits on how much money can be put into the account each year
  • Must be covered by a HSA Qualified Health Plan to make deposits into the savings account

 

 

Employees can typically access claim detail and balances online.