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Comparison of Consumer Driven Healthcare Accounts: HSA, HRA, FSA

Health Savings
Account

(HSA)

Health Reimbursement Account
(HRA)

Flexible Spending
Account

 (FSA)

ESTABLISHMENT OF ACCOUNT

• Eligible Individual

• Employer

• Integrate With Employer-Sponsored Cafeteria Plan

Employer-Sponsored Benefit Program

Employer-Sponsored Benefit Program Via Cafeteria Plan

ACCOUNT TYPE

Trust Or Custodial Account

• General Assets Of Employer

• Trust

• General Assets Of Employer

• Trust

CONTROL AND OWNERSHIP OF ACCOUNT

Employee

Employer

Employer

ACCOUNT PORTABILITY

Yes

No

No

HIGH-DEDUCTIBLE HEALTH PLAN (HDHP) REQUIRED

Yes

No

No

ELIGIBILITY

• Eligible Individual Covered By HDHP

• Eligible Employee Covered By HDHP

Employee Who Meets Employer’s Eligibility Criteria

Employee Who Meets Employer’s Eligibility Criteria

FUNDING

• Individual

• Employee Salary Reduction Dollars

• Employer

• Third Party

Strictly By Employer

• Employee Salary Reduction Dollars

• Employer

ACCOUNT LIMITS

Individual
Lesser Of

Deductible Amount ($1,050+) or $2,700
(For 2006)

Family
Lesser Of

Deductible Amount ($2,100+) or $5,450
(For 2006)

No Statutory Required Limit

No Statutory Required Limit

ANNUAL OUT OF POCKET LIMITS

• $5,250 Individual
(For 2006)

• $10,500 Family
(For 2006)

N/A

N/A

REQUIRED PRE-FUNDING

Yes

No

Yes

DISBURSEMENT OF MONEY

Checks, Debit Card, Withdrawal Slips

Reimburse Through Employer

Checks, Debits, Withdrawal Slips

QUALIFIED MEDICAL EXPENSES

• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs

• Retiree Health Insurance Premium Other Than Medicare Supplement Policies

• COBRA Premium

• Long Term Care (LTC) Insurance Premium

• Health Insurance Premium If Receiving Unemployment

Not Permitted:
• Any Other Type Of Health Insurance Premium

• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs

• Health Insurance Premium, Including LTC Premium


• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs

Not Permitted:
• Health Insurance Premium, Including LTC Insurance Premium

TAX TREATMENT OF CONTRIBUTIONS

• Individual’s Contributions To Own HSA Tax-Deductible

• Employee-Contributions To Employee’s Own HSA Are Tax-Deductible

• Employer-Contributions To Employee’s HSA (With Or Without Cafeteria Plan) With Salary Reduction Dollars:
- Deductible By Employer
- Excludable From
Employee's Gross Income

• Only Employer Contributions Permitted:
- Deductible
By Employer
- Excludable From Employee’s Gross Income

• Only Employer Contributions Permitted:
- Deductible
By Employer
- Excludable
From Employee’s Gross Income

TAXATION OF INTEREST OR DIVIDEND ACCUMULATION

Tax-Free

N/A

N/A

CONSEQUENCES OF CASHING-OUT ACCOUNT FOR NON-QUALIFIED MEDICAL EXPENSES

Distributions Are Taxed As Income And Subject To 10% Penalty Tax, Except Following:

  • Death
  • Disability
  • Attainment Of Medicare Eligibility Age

No Cash-Out Option Available

Some (Section 125 Rules Apply)

CARRY-OVER OF FUNDS PERMITTED

Yes

Yes
(Employer Decides)

No

DEATH OF ACCOUNT HOLDER

Surviving Spouse Only (If Designated Beneficiary) Entitled To Use Remaining Account Monies For Qualified Medical Expenses

Eligible Dependents Entitled To Use Remaining Account Monies For Qualified Medical Expenses, In Accordance With The Plan Document

Eligible Dependents Entitled To Use Remaining Account Monies For Qualified Medical Expenses, In Accordance With The Plan Document

APPLICABILITY OF ERISA

No

Yes

Yes

SUBJECT TO COBRA

  • No, If Not Employer-Based
  • Unclear, If Employer-Based

Yes

Yes

EFFECTIVE DATE

1/1/2004

6/26/2002

3/7/1989

Notes: Amounts listed are indexed annually.  Plus, there is an additional catch-up provision for individuals 55+ years, $700 in 2006 increasing $100 per year to $1,000 in 2009 and thereafter.



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