HSAs and HRAs: do your employees complain about the cost of insurance deductibles? Consumer-directed plans can help.Consumer-directed health care gives members control to make better decisions about their health care spending while creating awareness about the costs. Two terrific options for consumer directed health care are Health Savings Accounts A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. and Health Reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. Arrangements. Health Savings Accounts (HSA HSA Health Savings Account (US) HSA Human Serum Albumin HSA Human Services Agency (Nevada) HSA Health Services Agency HSA Health and Safety Authority (Ireland) ) are owned by the employee but the employer can make contributions. This special savings account Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: is coupled with a specific type of insurance plan called a qualified high deductible health plan A High Deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. It is sometimes referred to as a catastrophic health insurance plan. . The high deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). makes the cost of the insurance plan less than other types of plans. Employees save money in their HSA tax free in order to pay for the deductible. Unlike a Flexible Spending Account flexible spending account, n an employee reimbursement account primarily funded with employee-designated salary reductions. Funds are reimbursed to the employee for health care (medical and/or dental), dependent care, and/or legal expenses and are , money in an HSA rolls over from year to year. Banks usually charge a nominal monthly fee for an HSA. A Health Reimbursement Arrangement (HRA HRA Health Reimbursement Arrangement HRA Health Risk Assessment HRA Housing and Redevelopment Authority HRA Human Resources Administration HRA Health Reimbursement Account HRA Housing Revenue Account ) is a mechanism for setting aside money for an employee's health expenses. There is no separate bank account and the money set aside is fully owned by the employer. The employer contributes to the plan and is exempt from payroll taxes Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. creating savings for the company. The employer can also designate what types of medical expenses will be reimbursed under an HRA giving the employer maximum control. [ILLUSTRATION OMITTED]
Key features of Health Savings Accounts (HSAs) and Health Reimbursement
Arrangements (HRAs)
Feature HRA HSA
Funding Group-funded Group and employee funded
Fund owner Group Employee
Requires high No Yes
deductible
health care
plan
Eligibility All eligible employees Anyone without coverage
and no Medicare
Portable Group discretion Yes
Tax Group reimbursements are * Group contributions not
Contributions tax-deductible for the group subject to payroll taxes
and tax-exempt for the * After-tax member
member. contributions are
tax-deductible from
gross income.
* Pre-tax contributions
can be made through
payroll deduction.
Allowable Eligible IRS expenses Eligible IRS expenses and
withdrawals (generally limited to insurance under specific
employer covered benefits) conditions.
and insurance under specific
conditions.
Year-to-year Group discretion Yes
rollover
This page is brought to you by the Detroit Regional Chamber's Health Care Central ... the hub for all business related health-care issues. For learn more about this initiative, visit www.detroitchamber.com or call (866) MBR-LINE. The Detroit Regional Chamber offers a variety of consumer directed plans including the new Flexible Blue product for Health Savings Accounts. For more information, call your independent agent or Lazanda Anderson at (313) 596-0362. RELATED ARTICLE: Health Care CENTRAL The Detroit Regional Chamber sponsors a wide range of special health insurance options. Packages are designed exclusively for small and mid-sized employers and self-employed entrepreneurs. Through Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Michigan and Blue Care Network, many plans are available including traditional, Preferred Provider Organization pre·ferred provider organization n. Abbr. PPO A medical insurance plan in which members receive more coverage if they choose health care providers approved by or affiliated with the plan. , Point of Service and Health Maintenance Organization. These plans may include extensive benefits normally available only to large firms. Visit the Health Care Central section of our Website at www.detroitchamber.com for more details. Betty Jackson-Moore is director of insurance programs at the Detroit Regional Chamber. |
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