HSA vs. HRA vs. FSA Comparison

HSA vs. HRA vs. FSA Comparison2019-08-16T12:00:07-04:00

Health savings accounts (HSAs), health reimbursement arrangements (HRAs), and flexible spending accounts (FSAs) can all help you pay for qualified expenses related to your health care, which frequently include things like deductibles, copays/coinsurance, and prescription costs. However, there are some important differences you should consider when determining which account is the best fit for your needs.

Some things to consider include:

Health Savings Account (HSA)

Health Reimbursement Arrangement (HRA)

Flexible Spending Account (FSA)

Account OwnershipEmployee/ IndividualEmployer (held in employee’s name)Employer (held in employee’s name)
Deposits Made ByEmployer, employee or bothEmployerEmployer, employee or both
Separate AccountRequired; IRA-type accountNot required; can be paid from employer assetsNot required; can be paid from employer assets
Expenses CoveredMedical, dental, vision, prescription and some over-the-counter expenses. COBRA, retiree medical insurance premiums, LTC premiums or expense – Reference: IRC § 213(d)Medical, dental, vision, prescription and some over-the-counter expenses. Post-tax insurance premiums. – Reference: IRC § 213(d)Medical, dental, vision, prescription and some over-the-counter expenses – Reference: IRC § 213(d)
Accompanying Plan RequirementsMust be covered by qualified HDHP and not covered by any plan that covers medical expenses under the deductible

HDHP Minimum Deductible:
2020: $1,400 single; $2,800 family
2019: $1,350 single; $2,700 family

Maximum Out of Pocket:
2020: $6,900 single; $13,800 family
2019: $6,750 single; $13,500 family

Generally, must be integrated with group medical plan meeting health care reform requirementsNone
Contribution Limits2020: $3,550 self-only; $7,100 family; Catch-up: $1,000

2019: $3,500 self-only; $7,000 family; Catch-up: $1,000

None2020: Not announced

2019: $2,700 per plan year

The limit is per person. Employers may elect a lower contribution limit.

PortabilityFull portability requiredPortability allowed at employer’s discretionNone
RolloverFull rollover requiredRollover allowed at employer’s discretion$500 rollover allowed at employer’s discretion
Funds AvailabilityAs deposits are creditedAs deposits are credited; may be credited in a lump sumFull annual election available on first day of coverage (uniform coverage)
Claim AdjudicationNot allowed; though participants must retain receiptsRequiredRequired
Compatibility with Other Savings AccountsMay be paired with HRA/ FSA if limited to amounts over deductible, or to dental/ vision only; may be paired with DCAP, PRAMay be paired with FSA, DCAP, PRA. IF paired with an HSA, must be limited to amounts over the deductible or to dental/vision onlyMay be paired with HRA, DCAP, PRA. If paired with an HSA, must be limited to amounts over the deductible or to dental/vision only
Employer ContributionsCan be made on behalf of current employees (account extends to spouse and dependents)Can be made on behalf of current, former employees, their spouses and dependents, and spouses and dependents of deceased employeesCan be made on behalf of current employees (account extends to spouse and dependents)
ERISA PlanGenerally noYesYes
COBRADoes not applyAppliesApplies
RetireesCan be coveredCan be coveredCannot be covered
Debit Card UsageYesYesYes
Contributions for Medicare ParticipantsContributions cannot be made once an individual has Medicare coverageNo limits on contributionsNo limits on contributions
Usage for Ineligible ExpensesAllowed. Amounts included in income; subject to 20% penalty unless after account beneficiary’s death, disability or attaining age 65Not allowedNot allowed
Distributions for Expenses Incurred After Individual is No Longer EligibleCan be madeCan be made at employer’s discretion, or if COBRA is electedCan be made if COBRA is elected
Coverage for Sole Proprietors, Partners and 2% or More S-corp OwnersYes, but not eligible to participate in cafeteria plan used to fund HSA in the workplaceCannot be coveredCannot be covered

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