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What employees need to know about HRAs and HSAs

What you need to know about HSAs and HRAs

Both Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are avenues for employers to help employees pay for healthcare and health coverage. But what's the difference between them?

With new HRA options for employers beginning next year, here's what employers, HR pros and employees need to know to build the best benefit strategy possible.

Ownership

An HSA is owned by an individual while an HRA is owned by an employer. This means that the employee takes the HSA along when they change jobs. Because an HRA is employer-owned, if an employee leaves the company any remaining amount in the HRA remains with the employer.

Funding

An HSA can be funded by both the employee and the employer. An HRA can only be funded by an employer.

Availability

The money your employer makes available in an HRA is available at the beginning of the year. The money in an HSA is only there once it is actually contributed. Generally, employers contribute a set amount into an employee's HSA account each month. With an HRA, however, all of the employer funding is available at the beginning of the year. So, if you have a big medical expense at the beginning of the year, you might find an HRA more attractive.

Coverage

Beginning in 2020, employers will be able to reimburse employees for both individual insurance coverage as well as medical expenses. HSAs and HRAs generally can cover the same expenses, so it's important to keep in mind that there is no "double-dipping." In other words, you can't pay for a doctor's appointment from your HSA and then be reimbursed by your HRA.

Have more questions about offering HSAs and HRAs to employees? Click below to schedule a free consultation with a Bernard Benefits advisor.
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