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Description
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An HSA is a tax-advantaged savings account that is used in combination with a high deductible health plan (HDHP). Accountholders can use the HSA funds to cover eligible medical expenses.
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An employer-established, tax-advantaged account funded by the employee and/or the employer to pay for eligible medical expenses with pre-tax dollars.
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An HRA is an employer-funded plan that may be used to reimburse employees for eligible medical expenses.
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Annual Maximum
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The 2018 annual contribution limits are:
Individuals - $3,450
Family - $6,900
The 2019 annual contribution limits are:
Individuals - $3,500
Family - $7,000
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The 2018 annual contribution limit for a Health Care FSA is $2,650.
The 2019 limit will be announced soon.
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The IRS does not impose HRA limits. Limits are set by the employer.
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When is the amount available?
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As funds are contributed.
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Start of Plan Year.
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Depends on your specific plan design.
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Can you take the account with you if you leave your employer?
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Yes - you own the account.
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No - but you could continue using your FSA with COBRA, usually until the end of the year.
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No - but you could continue using your HRA with COBRA.
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Do you need to have a certain health plan?
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Yes - to have an HSA you must be enrolled in a qualifying High Deductible Health Plan (HDHP), and cannot be covered by any other non-qualifying health plan (such as being eligible for Medicare, having a Health Care FSA, or being considered as a dependent on someone else's tax return).
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No.
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Beginning in 2014, employees must be enrolled in employer-sponsored group coverage unless the HRA is limited to vision or dental expenses.*
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Do funds carry over from year to year?
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Yes.
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This is up to the employer. They are limited to carryover of up to $500 to the next Plan Year, OR allow a Grace Period.
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This is up to the employer.
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What can you buy with the account?
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Medical expenses under §213(d) of the Internal Revenue Code (IRC) (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). HSAs may not be used to pay insurance premiums except for (1) COBRA, (2) qualified long-term care insurance (3) health care coverage while the individual is receiving unemployment compensation; and (4) premiums for Medicare Part A or B, Medicare HMO, and (5) after age 65, the employee’s share of employer-sponsored retiree health care. Click here for more information.
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Any otherwise unreimbursed medical expenses that are defined under §213(d) of IRC (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). Health insurance premiums and long-term care services are not reimbursable. Click here for more information.
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Employers decide whether to reimburse all or a subset of any otherwise unreimbursed expenses that are qualified under §213(d) of IRC (over-the-counter drugs are not an eligible medical expense unless prescribed by a health care provider). This can include health insurance premiums (other than premiums that are paid through an employer’s consumer directed health care plan) and long-term care insurance premiums. However, long-term care services are not reimbursable. Click here for more information.
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Can you earn interest?
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Yes - interest can be accrued on a tax-deferred basis in qualified HSAs. And if the account balance reaches the minimum balance requirement, the funds can be invested in mutual funds and those gains are also tax free.
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No.
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No.
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How do you save money - what are the tax benefits?
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Contributions are tax free, interest and investment gains are tax free, and withdrawals are tax free when used for eligible medical expenses.
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Payroll deposits and claim payments are tax free.
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Free money to use for eligible medical expenses.
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