HSA/HRA Resources

What Are Health Savings Accounts (HSAs)?
An HSA is like a 401K for your healthcare expenses. Set up as tax-free accounts, HSAs are designed to help your employees save for their health expenses. HSAs have two parts:

1. A high-deductible health plan (HDHP) that covers large hospital and healthcare bills.
2. A bank/investment account to pay medical expenses up to the level of the deductible.

Any unspent money accumulates in an HSA from year to year, earning investment income tax free, and is available to pay for certain “Eligible Medical Expenses,” per IRS guidelines. Funds withdrawn from an HSA for non-medical purposes are subject to tax and a penalty. At retirement, your employees may continue to draw down their HSA for medical purposes or withdraw any unused funds from their HSA for other purposes, paying normal income taxes.

In the HSA model, consumers spend their own money up to the level of their high-deductible health insurance policy. Therefore, employees that exercise, refrain from smoking, maintain proper weight, and make appropriate healthcare decisions are financially rewarded. Learn more…

What Are Health Reimbursement Accounts (HRAs)?
Also known as Health Reimbursement Arrangements, HRAs are insurance arrangements set up by employers for group medical coverage. HRAs typically have higher deductible health insurance plans and may reimburse some out-of-pocket medical expenses for employees. In the administration of HRA plans, the employer determines the rules, such as whether reimbursements are made through:

• Set contributions to an employer-owned account established for each employee
• Reimbursement of medical expenses as they are incurred.

Unlike HSAs, in HRAs the employer rather than the employee establishes the reimbursement accounts. So if an employee leaves the company, the remaining funds are owned by the business.

Offering an HSA or HRA option enables a business to keep health insurance costs low while still ensuring that their employees will have the coverage they need. The high-deductible insurance makes employees fiscally responsible for their day-to-day healthcare costs while putting a cap on their expenses to ensure that they will be able to afford the services they need.

Learn more about nontraditional health-benefit solutions.