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HSA: Health Savings Account
A Health Savings Account (HSA) is a tax-advantaged savings account to be used in conjunction with qualified High Deductible Health Plans (HDHP) to pay for qualifying medical expenses. Contributions may be made to the account on a tax-free basis for current and future health expenses. Interest or investment returns accrue tax-free and remain tax-free as long as the funds are used for qualified medical expenses. Funds remain in the account from year to year and may be invested at the discretion of the member owning the account.
A High Deductible Health Plan (HDHP) features low premiums and integrated deductibles to give employees incentives to manage their benefits wisely. When paired with a Health Savings Account (HSA), employees can keep premiums affordable, set aside tax-free money for current-year health expenses and build savings for the future.
HRA: Health Reimbursement Arrangements
A Health Reimbursement Arrangement (HRA) is and employer-sponsored benefit program that reimburses employees for qualified medical expenses not already paid for by the employer's health plan. A Health Reimbursement Arrangement (HRA) is offered in conjunction with a High-Deductible Health Plan (HDHP), and is funded by the employer for each participating employee. It pays for eligible health care expenses typically covered under the medical plan up to a defined amount. If an employee does not spend all their HRA funds, the employer can establish provisions for rolling over the remaining funds so they can be used for future health care expenses. If the employee leaves the company, any HRA funds remain with the employer.
The Health Reimbursement Arrangement can be a great way to help stretch a company's healthcare budget because it allows the company to pay for healthcare expenses with money that is not taxed.
The flexibility of HSA's and HRA's insures employers can design a program best meets the needs of your company and your employees. Tolbert & Associates will help guide you through the process of setting up either style of account. Please contact us today for information on HSA's or HRA's.