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HRA, HSA, FSA Comparison Chart

HRA HSA FSA
Health Reimbursement Arrangement Health Savings Account Flexible Spending Account
History IRS Code 105(h) passed in 2002 IRS Code 223 passed in 2003 IRS Code 125 passed in 1978
Overview The funding option that gives the employer the most control. The employer determines what services are covered, and retains control over unused funds. HSAs are created at financial institutions in the employees' names and allow them to save and pay for medical expenses tax-free. Requires enrollment in an HDHP. FSAs allow employees to pay for medical expenses (deductibles, copays, etc.) tax-free. Requires employer involvement.
Account Owner Employer Employee Employee
Earnings Investments Generally, no earnings paid. Generally, interest paid and investments allowed. Earnings grow tax-free. No earnings paid.
Excluded Persons S-Corp, LLC, LLP, Partnership Owners, & their Spouse; Non-dependent domestic partners Medicare enrolled persons (cannot fund HSA but can continue to claim money already set aside in the HSA trust account); Non-Dependent Domestic partners. S-Corp, LLC, LLP, Partnership Owners, &ammp; their Spouse; Non-dependent domestic partners.
Employer Tax Savings Contributions are tax-deductible when paid to the participant to reimburse an expense. Contributions are tax-deductible in the year the contribution is made. Contributions are tax-deductible when paid to the participant to reimburse an expense. As a result of salary reductions, lower adjusted employee income reduces employer-matching FICA & federal unemployment.
Employee Tax Savings Reimbursements for eligible expenses are excluded from income. Contributions can be pre-tax or are tax-deductible on the employee's personal tax return. Funds earn interest tax-free. Reimbursements for qualified medical expenses are excluded from income. An employee may withdraw funds for non-medical expenses that are subject to income and excise tax. Contributions are made pre-tax. Reimbursements for eligible expenses are excluded from income.
2008 Maximum Contributions Employer determines maximum contribution. Lesser of annual deductible or $2,900 (self-only), $5,800 (family). Additional contributions up to $900 allowed for ages 55 and older. Employer determines maximum contribution for health care FSA. Child care FSA is limited to $5,000.
Source of Funding Employer Employer, employee and for any other individuals Employer and employee
Who owns Unused Funds? Employer Employee (eligible individual name on the established trust account) Employer
Is Fund Portable? No Yes, funds belong to the employee (or eligible individual). No
Do funds Roll Over? Yes, if an employer specifies. Yes No. However, an employer may establish up to a 2 1/2 month grace period.
Eligible Medical Expenses 213 medical expenses; including health-related premiums and long-term care insurance premiums; excludes LTC services 213 medical expenses; excludes most health-related premiums unless unemployed; includes long-term care premiums & services 213 medical expenses; excludes any health-related premiums
Funding Requirement Not required to pre-fund - uniform coverage rule does not apply. Funds must be present before withdrawal is made. An employer may contribute to HSA over time or all at once. Uniform coverage rule applies. Claims must be paid without regard to contribution amount.
2008 Deductible An HRA is not subject to a minimum deductible (deductible amount is established by the employer). $1,100 min self-only $2,200 family Healthcare FSA is not subject to a minimum deductible.
2008 maximum Out-of-Pocket The employer sets levels. $5,500 self-only
$11,000 family
Not applicable.
Allowable Expenses and Plan Restrictions Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, including health insurance premiums. May not reimburse expenses for qualified long-term care services. Employer may restrict the scope of reimbursements by plan design. If participant also has an HSA, HRA must be limited to dental expenses, vision expenses and expenses constituting preventive care. Can only be established by those who have qualifying high-deductible health plan coverage (deductible must meet statutory limit) and no disqualifying non-high deductible health plan coverage. Employees who are entitled to Medicare cannot establish or contribute. Allows otherwise unreimbursed medical Code Section 213(d) expenses, excluding most premiums. An employer cannot restrict the scope of HSA distributions, except for expenses paid with an electronic payment card. Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, excluding premiums on qualified long-term care services. An employer may restrict the scope of reimbursements by plan design. If participant also has an HSA, FSA must be limited to dental expenses, vision expenses and expenses constituting preventive care.
Non-Medical Expense Withdrawals No Taxable and subject to a 10 percent penalty (no penalty if age 65 or older, or disabled as defined by Code Section 72). No