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HSAs, FSAs, and HRAs – A Few Letters, A Lot of Questions

February 19, 2013  |   Posted by :   |   General   |   0 Comment»

by Michael Grace

When people think of health insurance, they sometimes don’t realize that there are different kinds with different advantages. It is important to know the differences so you understand the basics when setting up your account.

Flexible Spending Account (FSA) – contributions accounted that are funded to pay for healthcare expenses that you have to use the funds inside the FSA before the end of the plan coverage

Health Spending Account (HAS) – a contribution account that is funded to pay for healthcare expenses that can be held on until retirement if you choose

Health Reimbursement Account (HRA) –  accounts that an employer may set up for their employees to help them pay for out-of-pocket health related expenses

As you might have noticed, FSAs and HSAs are very similar. The primary difference is how long you can hold onto these accounts. The funds in FSAs need to be used before the end of the plan coverage or you will lose them. No one likes to watch their money go to waste so make sure you use every penny before it’s too late!

On the other hand, HSAs can be rollover from year to year. You can build your money over time. It can be saved grow further if you don’t feel like spending it all at once. Of course, you need to have a health insurance plan in order to qualify. In order to choose which one is right for you, you should talk with an insurance advisor and have a good assessment of your financial situation.

On the other side, there are HRAs that are funded solely by the employer, and cannot be funded through employee salary deductions. Some advantages of HRAs include:
–  Contributions that employers make can be excluded from employees’ gross income.
–  Reimbursements may be tax free if the employee pays qualified medical expenses.
–  Unused funds in the HRA can be rolled into future years for reimbursement.
–  HRAs may be offered may coincide with other employer-provided health benefits including Flexible Spending Accounts (FSAs).
–  Employees do not have to be covered under any other health care plan to participate

HRAs often involve more restrictions than FSAs or HSAs so make sure you meet the requirements.

Choosing the right insurance saving plan can be a tricky process. Give us a call at Orlando Insurance Store and we will assist you in determining which one is right for you and walk you through the entire process so you have a clear view of where your money is going.