Deciding which benefits to sign up for at work can be confusing. Insurance itself can be complicated enough, and if you have the option of a health care reimbursement account, you might be completely lost! Here is a guide to help you decide which account is right for you, depending on which options your employer provides:
HSA / FSA / HRA
|Health Savings Account (HSA)||Flexible Spending Account (FSA)||
Health Reimbursement Arrangement (HRA)
|Description||An HSA is a tax-advantaged savings account that is used in combination with a high deductible health plan (HDHP). Accountholders can use the HSA funds to cover eligible medical expenses.||An employer-established, tax-advantaged account funded by the employee and/or the employer to pay for eligible medical expenses with pre-tax dollars.||An HRA is an employer-funded plan that may be used to reimburse employees for eligible medical expenses.|
The 2018 annual contribution limits are:
The 2019 annual contribution limits are:
The 2018 annual contribution limit for a Health Care FSA is $2,650.
The 2019 limit will be announced soon.
|The IRS does not impose HRA limits. Limits are set by the employer.|
|When is the amount available?||As funds are contributed.||Start of Plan Year.||Depends on your specific plan design.|
|Can you take the account with you if you leave your employer?||Yes - you own the account.||No - but you could continue using your FSA with COBRA, usually until the end of the year.||No - but you could continue using your HRA with COBRA.|
|Do you need to have a certain health plan?||Yes - to have an HSA you must be enrolled in a qualifying High Deductible Health Plan (HDHP), and cannot be covered by any other non-qualifying health plan (such as being eligible for Medicare, having a Health Care FSA, or being considered as a dependent on someone else's tax return).||No.||Beginning in 2014, employees must be enrolled in employer-sponsored group coverage unless the HRA is limited to vision or dental expenses.*|
|Do funds carry over from year to year?||Yes.||This is up to the employer. They are limited to carryover of up to $500 to the next Plan Year, OR allow a Grace Period.||This is up to the employer.|
|What can you buy with the account?||Medical expenses under §213(d) of the Internal Revenue Code (IRC) (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). HSAs may not be used to pay insurance premiums except for (1) COBRA, (2) qualified long-term care insurance (3) health care coverage while the individual is receiving unemployment compensation; and (4) premiums for Medicare Part A or B, Medicare HMO, and (5) after age 65, the employee’s share of employer-sponsored retiree health care. Click here for more information.||Any otherwise unreimbursed medical expenses that are defined under §213(d) of IRC (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). Health insurance premiums and long-term care services are not reimbursable. Click here for more information.||Employers decide whether to reimburse all or a subset of any otherwise unreimbursed expenses that are qualified under §213(d) of IRC (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). This can include health insurance premiums (other than premiums that are paid through an employer’s consumer directed health care plan) and long-term care insurance premiums. However, long-term care services are not reimbursable. Click here for more information.|
|Can you earn interest?||Yes - interest can be accrued on a tax-deferred basis in qualified HSAs. And if the account balance reaches the minimum balance requirement, the funds can be invested in mutual funds and those gains are also tax free.||No.||No.|
|How do you save money - what are the tax benefits?||Contributions are tax free, interest and investment gains are tax free, and withdrawals are tax free when used for eligible medical expenses.||Payroll deposits and claim payments are tax free.||Free money to use for eligible medical expenses.|
*PHS Act sec 2711, per DOL FAQ re: PPACA Part XI Q1, Q3 http://www.dol.gov/ebsa/faqs/faq-aca11.html HRA Enrollees must be enrolled in group health plan.
Compare your options carefully in order to decide what will be best for you and your family. Consulting a personal financial and/or tax advisor may give you a better idea of what plan will be best for your particular situation.
If you have any questions, please contact us by calling 866-818-8805, or by filling out an online contact form.