Health Reimbursement Accounts Vs. Health Savings Accounts

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Health Reimbursement Accounts and Health Savings Accounts both allow insurance consumers to put pre-tax income toward health care costs, but they differ in who has control over the funds.

Employer-based Health Care

Getting insurance through your employer can save money because companies can negotiate for lower rates. Most plans use a combination of company and employee contributions.

Consumer-driven Health Plans

Another option in both group and individual insurance is the consumer-driven plan, which combines high-deductible health insurance with a savings account that allows the insured to use pretax money.

Health Reimbursement Accounts

An employer can set up an HRA to cover expenses of a high-deductible plan and both the company and the worker can use the saved money to pay the worker's medical expenses

Health Savings Accounts

An individual can create a health savings account, deduct income from his or her paycheck and use that to pay off deductibles and other health care costs.

Differences

An HSA is portable and can be used by an individual as they move from job to job. An HRA and all of its funds will remain with an employer.

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