HRA_HSA

DID YOU KNOW...
your HSA plan will allow you to save money tax-free and pay for qualified health expenses, whether you itemize your taxes or not? Also, the money in your HSA plan is yours to keep and will roll over and continue to grow from year to year.

With the cost of health care and health insurance premiums on the rise, employers are looking for ways to save money while still providing a quality safety net to employees. By redesigning employee benefit offerings, an employer can accomplish both goals. Most carriers now offer consumer driven health plans (CDHP) that shift some of the cost sharing to the employee. An employer can offer an HRA or HSA plan to help close the cost sharing gap.

Key Elements of an HRA
	HRAs are employer-funded. Employee contributions are not permitted.

	The employer can decide what benefits to reimburse. Some popular plan designs, for example, are to fund a portion of the deductible or to reimburse for inpatient hospital services.
	HRAs allow an employer to essentially self-insure a portion of their health insurance. The employer will know what their maximum liability is for the year and hopefully will realize significant savings depending on employee utilization.
	Unlike an FSA, an HRA allows for the rollover of funds at the employer’s discretion, however rollovers are not a mandatory feature.
	Employees can receive reimbursement free of all federal and state taxes. These contributions are 100% tax deductible to the employer.
	An HRA can also be used to self-insure dental or vision benefits or any other elgible health expenses. The plan design possibilities are almost endless!
	An employer can control the availability of funds – such as make the employee’s allotment available up-front (like a health care FSA) or pro-rated based on pay cycle (like a dependent care FSA) or some other schedule (e.g. monthly, quarterly).
	HRA plans can also be offered to retirees, which could provide a competitive edge.

A Health Savings Account (HSA) is an employee-owned account offered in conjunction with a qualified High Deductible Health Plan (HDHP). Employers favor these plans because, along with the decreased premium of the HDHP, the money contributed to the HSA is 100% tax deductible or the employer may choose to contribute nothing at all. Employees like HSAs because, since the account is always vested, it is 100% portable. Employees maintain control over when and if to use funds.

The account is established exclusively for the purpose of paying for qualified medical expenses incurred by the account beneficiary and/or qualifying dependents. Both employers and employees can make tax-free contributions to the HSA, up to a specified limit, indexed annually by the IRS.