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HSA FSA HRA - What's the Difference?

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August 9, 2014


HSA  FSA  HRA – What’s the Difference?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/
.