HRA's and HSA's

describe the imageEmployers are increasingly looking to consumer-driven health plans to help soften the blow of continually rising health care costs.  Depending on the model, some plans allow employees to use HSA's or HRA's to pay for medical expenses that are not covered by insurance.

Comparing HSA's and HRA's: which is best for your company?*

  HSA HRA
Name of Account Health Savings Account Health Reimbursement Arrangement
Who owns the account? Individual / employee Employer
Who may fund the account? Employer or employee can contribute pre-tax dollars Employer
Is there a limit on the amount that can be contributed per year? $3,250 individual
$6,450 family
No, there is no IRS prescribed limit
Can unused funds be rolled over from year to year? Yes Yes, subject to COBRA
What expenses are eligible for reimbursement?
  • COBRA premiums
  • QLTC premiums
  • Health premiums while receiving unemployment benefits
  • If Medicare eligible due to age, health insurance premiums except medical supplement policies
  • Health insurance premiums for current employees, retirees, and qualified beneficiaries, and QLTC premiums
  • Employer can define "eligible medical expenses"

*Data current for 2013