HSA FSA HRA - What's the Difference?

August 9, 2014

As health care costs continue to escalate, many consumers are looking for alternatives to help them save money. Enter HSAs, FSAs and HRAs. Though they’ve been around for a while now, not everyone is familiar with what they are, how they work or how beneficial they can be.

Created in 2003, Heath Savings Accounts are tax-advantaged medical savings account that are paired with a high-deductible health plan. A high-deductible health plan is classified as one with a deductible of at least $1,250 for individual coverage or $2,500 for family coverage. In 2015, consumers with an HSA can save up to $3,350 individually or $6,650 for families. HSA holders 55 and older get to save an extra $1,000 which means $4,350 for an individual and $7,650 for a family. * The tax advantage? These contributions are 100 percent tax deductible. Any unused money also rolls over from year to year, unlike other accounts. You also own the account; if you change jobs, it goes with you.

With a Flexible Spending Account, you don’t own the account, your employer does. But you get to decide how much to save (up to $2,500) and what to spend the money on (as long as it’s for qualified medical expenses). Plus an FSA uses pretax dollars, and it doesn’t require a high-deductible plan. In the past, an FSA did not allow consumers to carry over any unused money from year to year. Last year the rules changed, allowing up to $500 to be carried over each year.

A Health Reimbursement Account is funded only by an employer. Your employer decides whether to let you carry over the entire fund or only a portion into the following year. HRA’s can also be used with any type of health insurance.

For more information on these accounts, talk with your company’s HR department or a reputable broker. You can also find information at:

*www.hsacenter.com/index.html,
www.healthcare.gov/can-i-use-a-flexible-spending-account-fsa/,
www.healthcare.gov/glossary/health-savings-account-HSA/, and
www.healthcare.gov/glossary/health-reimbursement-account-HRA/.