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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