FSA / HSA / HRA
When it comes healthcare, there are three popular employer-sponsored benefit accounts: Flexible Spending Account (FSA), Health Savings Account (HSA), and Health Reimbursement Arrangement (HRA). At first glance, when comparing an FSA vs HSA, FSA vs HRA, or HRA vs HSA, it can feel a little daunting. Each account has some overlapping similarities, but each is remarkably different.
Flexible Spending Accounts (FSA)
Add an FSA account to a benefit program with optional rollover or grace period to help members pay for copays, deductibles, and qualified out-of-pocket expenses with pre-tax funds. Benveo offers Healthcare, Dependent Care, and Parking & Transit FSA accounts.
Benveo Makes It Easy to Manage FSA Accounts
FSA benefits include member debit cards, a dedicated FSA mobile app allowing participants to access their account, view balances, and submit claims on the go, and access to the FSA portal that is integrated directly with the employee benefits portal.
Healthcare Savings Accounts (HSA)
Employees participating in a qualified HDHP can open an HSA account. Contributions to an HSA are not subject to federal or state income tax, they rollover year-to-year, and can have interest bearing accounts. HSA funds can be withdrawn tax-free to pay for eligible medical expenses and can be funded by the employee, by the employer, or both the employee and employer.
Benefits for Employers
- Employers reduce FICA taxes
- Employer contributions to employee HSAs are tax-deductible
Benefits for Employees
Employees not only have access to funds to pay for current and future healthcare expenses, but also qualify for 3 tax advantages:
- Contributions are pre-tax
- Withdraw ls for qualified medical expenses are tax-free
- Interest earned on investment fund options are tax-free
Healthcare Reimbursement Accounts (HRA)
HRA plans are employer sponsored and offer maximum employee healthcare benefits in conjunction with a high deductible health plan (HDHP). Employers set the HRA dollar amount for employee medical expenses and employees use these tax-free employer funds to pay for healthcare expenses. HRAs must be paired with a qualified Health Plan in order to be eligible for pre-tax deduction.
The Advantages of HRA Benefits
- Contributions are tax deductible to Employers and tax free to employees
- Contributions can be defined by the Employer either by allocating a specific amount of money or by covering specific types of healthcare expenses
- Employer carryover option