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Consumer Driven Health Plans
Health Savings Accounts (H.S.A)
Health Savings Accounts (HSAs) were introduced as a way for individuals, families, and small businesses to lower their premium payments and save for retirement. In short, high-deductible health insurance plans are utilized, and pretax contributions are put aside (into an HSA) to use for qualified medical expenses that fall under the deductible, or are not covered by the high-deductible plan. Any money that is unused in an HSA is rolled over from year to year and once the individual reaches retirement age, this money can be used for long-term care premiums or to help pay for expenses that are not covered by Medicare.
HSAs are an exciting way to save on health care coverage for individuals, families, and employees... but there is a lot to consider when designing a program for your situation. Our office has a thorough understanding of these products and would love to have the opportunity to assist you in designing the appropriate HSA program that is right for you.
The HSA program has two parts: a high-deductible health plan (which usually costs less than other health plans) and a tax-advantaged, portable savings account for payment of current medical expenses, which builds like a Medical IRA.
Because the HSA is tied to a high-deductible health insurance policy, you will “pay as you go” for medical care, using your tax-free HSA dollars, until you spend up to the deductible. Once you meet the deductible, the health insurance pays for most of your medical expenses for the rest of the year.
Health Reimbursement Accounts (HRA)
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Health Reimbursement Accounts (HRA) are accounts financed by employers to reimburse employees for eligible health care expenses that are not paid by their health insurance plan (such as deductible and coinsurance). HRA payments are treated as a business expense rather than salary, and therefore are not subject to FICA and unemployment taxes.
HRAs are generally offered by employers that self-insure all or a portion of their health care. The HRA provides a method for self-insuring employers to put in consumer-directed efforts to reduce overall health care costs and increase employee satisfaction at the same time. HRAs are more complicated to administer than HSAs. A key limitation of HRAs is that only the employer can fund the HRA.
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