By Danielle Capilla
Chief Compliance Officer at United Benefit Advisors
Health reimbursement arrangements (HRAs), health savings accounts (HSAs) and health care flexible spending accounts (HFSAs) are generally referred to as account-based plans. That is because each participant has their own account, at least for bookkeeping purposes. Under the tax rules, amounts may be contributed to these accounts (with certain restrictions) and used for health care on a tax-favored basis.
The Patient Protection and Affordable Care Act (PPACA) has added new requirements that affect HRAs and HFSAs. Most HFSAs and HRAs will need to be amended to meet the new PPACA requirements. HSAs generally are not affected by PPACA.
The chart below describes the main characteristics of these types of accounts.
| HFSA | HRA | HSA | |
| Who may legally participate? | Any employee who is also eligible to participate in a group medical plan sponsored by the employer; retired employees are eligible if most participants are active employees. | Any employee who is covered by a group medical plan sponsored by the employer (or if the employer chooses, by the spouse’s employer); retired employees are eligible (a retiree-only plan does not have to meet the medical coverage requirement). | Any employee who is covered by a high deductible health plan (HDHP), not covered by a plan that is not an HDHP, and not covered by any part of Medicare or eligible to be claimed as a tax dependent; individuals who are receiving Medicare may not contribute to an HSA. |
To help determine the best option for your particular situation, request the UBA PPACA Advisor, “HRAs, HSAs, and Health FSAs – What’s the Difference?” for a comprehensive chart comparing eligibility criteria, contribution rules, reimbursement rules, reporting requirements, privacy requirements, applicable fees, non-discrimination rules and other characteristics of these types of accounts.
UBA’s Health Plan Survey analyzes a wide range of health care costs trends. To read the full press release announcing the latest findings related to HSA funding, click here. For all the latest health plan cost trends, download the UBA Health Plan Survey Executive Summary. To benchmark your plan to others in your region, industry or size bracket, contact a UBA Partner near you to run a custom benchmarking report.