Health Reimbursement Accounts Vs. Health Savings Accounts
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.
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Employer-based Health Care
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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
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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.
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Health Reimbursement Accounts
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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
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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
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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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