|
HSA |
FSA |
HRA |
Overview |
HSAs are created at financial institutions in the employees’ names and allow them to save and pay for medical expenses tax-free. Requires enrollment in a HDHP1. |
FSAs allow employees to pay
for medical expenses
(deductibles, co-pays and
services not covered by their plan) tax-free. Requires
employer involvement. |
HRAs are the funding option that gives employers the most control. Employer determines
what services are covered, and
retains control over unused
funds. |
| Contributions |
Employer – Optional
Payroll deferral -Optional
Employee direct -Optional |
Employer – Optional
Payroll deferral -Optional
Employee direct -Not allowed |
Employer – Required
Payroll deferral –Not allowed
Employee direct –Not allowed |
| Tax Savings |
Employer – deductible
Payroll def–tax free + 7.65%²
Employee direct –deductible |
Employer – deductible
Payroll def –tax free + 7.65%²
Employee direct –not allowed |
Employer – deductible
Payroll def –not allowed
Employee direct –not allowed |
| Acct Owner |
Employee |
Employer |
Employer |
Earnings
Investments |
Generally interest paid and investments allowed. Earnings grow tax-free. |
No earnings paid |
Generally, no earnings paid |
Eligible
Expenses & Distributions |
213(d) medical expenses, dental, vision, Medicare and
LTC premiums, COBRA (when unemployed), Health premiums
at age 65, and may withdraw
any time for any reason
(subject to 10% penalty)4. |
213 (d) medical expenses,
dental, vision, Medicare and
LTC premiums, sometimes dependent care, health insurance premiums. Cannot
access for non-medical reasons. |
213(d) medical expenses, dental, vision, Medicare and LTC
premiums, health insurance
premium, and LTC premium. Cannot access for non-medical reasons. |
| Claims Substantiation |
Only employee required to maintain supporting records. Employer need not review. |
ERISA plan -Employer or Administrator must
substantiate expenses. |
ERISA plan -Employer or Administrator must substantiate
expenses. |
| Employer Involvement |
None Required. Employer may contribute and allow for payroll
deferral (either after-tax or
through a §125 plan). |
Required. ERISA Plan |
Required. ERISA plan. |
Ability to Use for Multiple
Year’s Expenses |
Yes, can save and use current year’s contributions for future
year’s expenses. May also use
future year’s contributions to cover current year’s expense. |
No, generally must elect
amount prior to the start of
year and then stick with that amount. No or limited ability
roll over for future use. |
Employers generally allow some rollover for future year’s use;
however, money does not go with employee if the employee changes jobs. |
| Admin Cost |
$25 per yr per employee. Fees
often deducted from the HSA and paid by employee. |
$4-6 per month per employee. Fees generally paid by employer. |
$4-$6 per month per employee. Fees generally paid by employer. |
