Attributes

Health Savings  Account (HSA)

Health Reimbursement Arrangement (HRA)

Flexible  Spending Account (FSA)

 

 

 

The Basics

 

 

A tax-advantaged account used to pay qualified medical expenses of the account holder, spouse, or dependent.

 

An employer-funded arrangement used to reimburse employees for employer-selected qualified medical expenses. HRA must be integrated with group health plans to satisfy ACA market reform restrictions.

 

An employer-established tax-advantaged account funded by employees to pay for qualified medical expenses with tax-free dollars.  FSA must be offered with an underlying group health plan and

may not reimburse more than two times employee.

 

Who can open the account?

 

The employee or employer, as long as the employee is enrolled in a qualified high deductible health plan.

 

The employer; however, it may not necessarily require opening a separate account.

 

The employer.

 

Who can contribute?

 

Employers, employees, or any third party.

 

The employer.

 

The employee and the employer, but employer subject to above-referenced limits.

 

 

Who owns the account?

 

 

The employee.

 

 

The employer.

 

All unspent funds revert back to the employer at year-end unless  plan allows carryover or grace period as stated below.

 

 

Is there a yearly contribution limit?

 

Yes. In 2021, $3,600 for individuals  and $7,200 for families. Accountholders aged 55 and older may contribute an additional $1,000 (individual and family).

 

 

Not applicable.

 

Yes. Determined by the employer, but cannot exceed $2,750. Any permitted carryover amount does not count toward this annual limit.

 

 

 

Do unused funds carry over to the next year?

 

 

 

Yes.

 

 

 

Determined by the employer.

Yes, if plan document is properly amended, employer can allow up to $550 to carry over to next year. Or employer may allow a 2½ month grace period immediately following the plan year, i.e. the 15th of the third month following the end of the plan year. Employer cannot allow the carryover and grace period simultaneously.

 

Can you take the account with you if you change jobs or retire?

 

 

Yes.

 

No, but employers can design HRAs to permit individuals to access funds after employment termination and/or retirement.

 

 

No.

 

 

Can you use the account for retirement income?

 

Yes. After age  65, you can withdraw money for any reason with no penalty, although it will be taxed as income if the withdrawal is not for the reimbursement of qualified medical expenses.

 

Not typically; however, you may access unused accumulated funds during retirement to pay for qualified medical expenses.

 

 

No.