What is the Difference between an HSA and an HRA?

HRAs and HSAs both aid with the costs related to health indemnity and health care but they work very differently .
HSAs, or Health Savings Accounts, are owned by the individual. HRAs, or Health Reimbursement Arrangements, are agreements that are owned by employers .
Let ’ s get into detail about what HSAs and HRAs are .

What is an HSA?

An HSA, or Health Savings Account, is owned by the individual. They are tax-advantaged accounts that are for people with high deductible health policy plans.

Both the person who owns the account and their employer can contribute to the score up to a certain measure each year. These accounts are like to an IRA but for health expenses !
These funds can be used to pay for qualify medical expenses. These expenses include things like :

  • Most medical care
  • Most dental care
  • Most vision care
  • Over-the-counter drugs

These plans are one way people can help afford their health care costs if they have a high deductible, which is the sum of money a person pays for their ( or their kin ’ randomness ) health concern before their health policy kicks in .
Because this is the employee ’ second report, this means that if an employee leaves their current job, they take their HSA with them .
Keep in thinker, to have an HSA you must have an HSA-eligible design. HSA-eligible plans are high-deductible health plans, besides called HDHPs .

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What is an HRA?

HRAs are employer-funded plans that pay back, or reimburse, employees for modify aesculapian expenses and sometimes health insurance premiums. Unlike an HSA, HRAs are not bank accounts, they are an agreement between the employee and employer .
Employers are allowed to claim a tax tax write-off for these reimbursements. Plus, the money that employees get from their employers is typically tax-exempt as well .
Unlike an HSA, an HRA is not an score. The employee must make the health care payment, and then have it reimbursed after. This besides means that an employee can ’ t take their HRA with them if they leave their job .

Is an HSA or an HRA better?

To decide which plan is right for you, take a look at your health insurance needs and budget .
If you are an employee, consider what would best suit your ( and your syndicate ’ sulfur ) health caution and budgetary needs .
If you are person with a small occupation who is considering what would be the best for your employees, it ’ randomness authoritative to understand that employee benefits like these are highly sought after. additionally, you may help you save on your little business taxes by opting for an HRA for your employees .
If you need more advice on which is right for you, eHealth ’ s licensed agents can help figure out which option best suits your specific set of needs.

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Who should have an HSA?

An HSA is a bang-up option to have if you have an HDHP .
HSAs have enough of perks like :

  • Tax-deductible contributions
  • Your money rolls over into the following year
  • Covers medical expenses that your insurance plan may not cover

however, it ’ south important to consider that an HDHP and an HSA are not the best option for everyone. For case, if you expect to have a batch of health worry needs or need long-run worry, a low-deductible health indemnity design may be a better choice .
When deciding if you should open an HSA and get an HDHP, make sure to consider your healthcare needs of your past, present, and future. besides make certain to look at what best suits your budget in the long term .
As an employer, it ’ s important to note that contributing to employee HSAs is important to employees and helps them save on unexpected health and can prevent surprise medical bills .

Who should have an HRA?

If you have the option to have an HRA, it may be a adept estimate for those where an HDHP doesn ’ metric ton work for their needs .
An HRA :

  • Is entirely funded by an employer
  • Covers a wide range of medical expenses, some that your insurance may not cover
  • Doesn’t require an HDHP

It ’ south important to keep in mind that if you do choose to leave your speculate, your HRA does not follow you .
If you are considering this choice for your employees, it ’ sulfur crucial to keep in mind that :

  • The employer sets annual contribution limits
  • The employer sets most of the rules behind your plan
  • The reimbursements you make are tax deductible
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Can I have an HSA and an HRA?

Yes, you can have both. however, in order to have both an HSA and an HRA you must :

  • Have an HSA qualified HDHP
  • Not be covered under other health insurance that is not an HDHP

additionally, your HRA must be compatible with your HSA. This typically means that you will have to be eligible for reimbursement under a “ limited determination HRA ” .
A limited purpose HRA means that in the years that contributions are made to your HSA, the HRA can only be used to reimburse :

  • Health insurance premiums
  • Dental expenses
  • Vision expenses
  • Wellness/preventative care, like checkups
  • Long-term care premiums

While both HSAs and HRAs are both used to help pay health insurance and health worry costs, they are both very different .
Be indisputable to consider your health care needs and budgetary restrictions before making the decision to get an HRA, an HSA, or both .
eHealth is here for you when making tough decisions like these. Our accredited health policy agents can help you figure out which option is best for you !