Compare HRA, HSA and FSA

Flexible Spending Accounts are a great way for your employees to save money on healthcare and childcare costs...and reduce your payroll taxes! See which plan/account works best for your company.

2019 Comparison

 

HRA
(Health Reimbursement Arrangement)

HSA
(Health Savings Account)

FSA
(Flexible Spending Account)

Definition

An employer-funded medical expense reimbursement plan for qualifying medical expenses.

An employer- and/or employee-funded account in the employee’s name (eligible individual) for current and future medical expenses; requires a high-deductible health plan and a qualified trustee or custodian.

An employee- and/or employer-funded account for qualifying medical expenses.

Qualifications

Any size group (only common-law employees can participate on a tax-free basis).

Any size employer (only eligible individuals can establish an HSA).

Any size group (only common-law employees can participate).

Employer tax savings

Contributions are tax-deductible when paid to the participant to reimburse an expense.

Contributions are tax-deductible in the year the contribution is made.

Contributions are tax-deductible when paid to the participant to reimburse an expense. As a result of salary reductions, lower adjusted employee income reduces employer-matching FICA & federal unemployment.

Employee tax savings

Reimbursements for eligible expenses are excluded from income.

Contributions can be pre-tax or are tax-deductible on the employee’s personal tax return. Funds earn interest tax-free. Reimbursements for qualified medical expenses are excluded from income. Employee may withdraw funds for non-medical expenses that are subject to income and excise tax.

Contributions are made pre-tax. Reimbursements for eligible expenses are excluded from income.

2019 maximum contributions

Employer determines maximum contribution.

The IRS determines the maximum contribution limit. Maximum contributions for 2019 is limited to,$3,500 (single), $7,000 (family). Additional contributions allowed for ages 55 and older. Partial-year restrictions apply.

Employer determines maximum contribution, not to exceed the IRS maximum contribution limit. The IRS maximum contribution for 2019 is limited to ($2,700). ($2,650 in 2018)

Source of funding

Employer

Employer, employee and any other individual

Employer and employee

Who owns unused funds?

Employer (unless benefits are paid from a trust)

Employee (eligible individual name on the established trust account)

If funds attributable to employee are pre-tax salary reductions, the plan owns (in the case of an ERISA plan)

Are funds portable?

No (however, it may have a post termination spend-down feature).

Yes, funds belong to the employee (or eligible individual).

No

Do funds rollover?

Yes, if employer specifies.

Yes

A plan may be designed to allow up to $500 in unused funds to carryover into the next plan year. If the plan does not have a carryover feature, an employer may establish a grace period. For more information, see your health plan documents or contact BenefitHelp Solutions.

Funding Requirement

Not required to pre-fund - uniform coverage rule does not apply.

Funds must be present before withdrawal is made. Employer may contribute to HSA over time or all at once.

Uniform coverage rule applies. Claims must be paid without regard to contribution amount.

2019 deductible

An HRA is not subject to a minimum deductible. An HRA may be offered in conjunction with a high-deductible health plan (deductible amount established by employer).

$1,350 min (single)
$2,700 min (family)

Healthcare FSA is not subject to a minimum deductible.

2019 maximum out-of-pocket

Employer sets funding levels.

$6,750 min (single)
$13,500 min (family)

Employer sets funding levels

Allowable expenses and plan restrictions

Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, including certain health insurance premiums. May not reimburse expenses for qualified long-term care services. Employer may restrict scope of reimbursements by plan design. If participant also has an HSA, HRA must be limited to dental expenses, vision expenses and expenses constituting preventive care. Over-the-counter drugs and medicines (except insulin) are not eligible unless prescribed by a medical provider.

Can only be established by those who have qualifying high-deductible health plan coverage (deductible must meet statutory limit) and no disqualifying non-high deductible health plan coverage. Employees who are entitled to Medicare cannot establish or contribute. Allows otherwise unreimbursed medical Code Section 213(d) expenses, excluding most premiums. Employer cannot restrict the scope of HSA distributions, except for expenses paid with an electronic payment card (so long as account beneficiary has other means to obtain funds from HSA). Over-the-counter drugs and medicines (except insulin) are not eligible unless prescribed by a medical provider.

Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, excluding premiums on qualified long-term care services. Employer may restrict scope of reimbursements by plan design. If participant also has an HSA, FSA must be limited to dental expenses, vision expenses and expenses constituting preventive care. Over-the-counter drugs and medicines (except insulin) are not eligible unless prescribed by a medical provider.

Prescription co-pay

Yes, depending on the plan set by the employer.

Yes

Yes

Non-medical expense withdrawals

No

Taxable and subject to a 20 percent penalty (no penalty if age 65 or older, or disabled as defined by Code Section 72).

No

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