HSA / HRAA 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. Unlike a Flexible spending account (FSA), funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health ReimbursementArrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated very similarly to those in an IRA account in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer driven health care.

HSAs are an important reform that will help reduce the growth of health care costs and increase the efficiency of the health care system. HSAs encourage saving for future health care expenses, allow the patient to receive needed care without a gate keeper to determine what benefits are allowed and make consumers more responsible for their own health care choices through the required High-Deductible Health Plan.

Health Reimbursement Accounts, or Health Reimbursement Arrangements, (HRAs) are IRS-sanctioned arrangements that allow an employer, as agreed to in the HRA plan document, to reimburse for medical expenses paid by participating employees. HRAs reimburse only those items (copays, coinsurance, deductibles and services) agreed to by the employer which are not covered by the company’s selected standard insurance plan (any health insurance plan, not only high-deductible plans). These arrangements are described in IRS Section 105.

Qualified claims must be described in the HRA plan document at inception, i.e., before reimbursing employees for those medical expenses. Arrangements (medical services, dental services, co-pays, coinsurance, deductibles, participation) may vary from plan to plan, and an employer may have multiple plans in place, allowing much flexibility.

The employer is not required to prepay into a fund for reimbursements, instead, the employer reimburses employee claims as they occur. Reimbursements of qualified claims are tax-deductible for the employer.

Reimbursements claimed by the employee are tax free (not included in W2 earnings), provided they are tied to qualified health care expenses (as defined in Section 105). HRAs are initiated by the employer and serviced by a third-party administrator or plan service provider; the employee does not pay for the right to participate. The employer may provide in the HRA plan document that credit balances in an employee’s HRA account can be rolled over from year to year like a savings account. The employer decides if the funds are rolled from year to year and how much rolls over (which can be either a flat amount or a percentage).

HRAs are another major part of the growing trend toward greater health care consumer responsibility. With Health Reimbursement Arrangement (HRA) Administration from The Foley-Connelly Benefits Group an HRA becomes a timely, powerful resource that benefits both you and your HRA participants. An HRA can be used in conjunction with a high deductible health plan to curb premium costs.

With HRA Administration from The Foley-Connelly Benefits Group you get:

  • Quick claims adjudication and turnaround for health and dependent care expenses
  • Nondiscrimination testing
  • FSA enrollment support
  • Debit Card
  • Benefits industry news

When it comes to employee benefit administration, the thing to remember is that The Foley-Connelly Benefits Group will tailor a benefits plan design exclusively for your company. Through individual consultations, we’ll help ensure that your plan design fits your business needs. As your company grows, we’ll be there to adjust your plan to fit your changing needs.

Complete your Benefits Administration package with FSA Administration, HRA Administration, Direct Billing and Premium Only Plans (POP) from The Foley-Connelly Benefits Group.

Start saving with HRA and FSA Administration from The Foley-Connelly Benefits Group …