Health Insurance Savings Arrangements (HSAs)
Health Savings Arrangements (H.S.A’s, and Consumer-Directed Health Plans)
President George W. Bush signed a Medicare Bill on December 8, 2003, which created the tax-favored treatment of the H.S.A. They are designed to help employees and individuals save for qualified medical expenses tax-free.
An H.S.A is an account owned by an individual or employee and is used to pay for current and future medical expenses. In order to qualify for a plan, an employee must be enrolled in an IRS qualified High-Deductible Health Plan or HDHP. Insurance does not cover the first dollar of expenses, other than preventive care, and can work with an HMO, Indemnity or PPO plan as long as they meet the IRS guidelines for a HDHP.
There are some guidelines for eligibility for an H.S.A such as: being covered by a HDHP, you CAN NOT be covered by another health insurance plan, and you must not be enrolled in Medicare. There are NO income limits on who may contribute to an H.S.A either.
There are some combinations of H.S.A/HRA combinations such as “limited purpose” HRAs that restrict expense reimbursements to certain things such as dental or vision.
In 2008, the minimum deductible amounts for a single employee were $1100, and $2200 for family coverage. As such the maximum annual out-of-pocket expenses accordingly are $5600 for singles and $11200 for families. These amounts are indexed annually for inflation.
For more information you can visit the Treasury Departments home page at: www.ustreas.gov
Health Insurance Reimbursement Arrangements (HRAs)
HRAs are employer-funded accounts; they are actually a “promise-to-pay” by the employer. They are accounts that employees draw upon for qualified medical expenses.
Normally HRAs work in conjunction with high-deductible health plans (HDHP), or consumer-directed health plans. In order to have an HRA though, an employer does NOT need to have an IRS qualified HDHP, as is the case with another consumer-directed product, the Health Savings Account (H.S.A).
Thoseare qualified accounts in interest-bearing vehicles, normally a bank, and are owned by the employee.
HRAs are a great way for employers to be able to create consumer awareness in its employees, as evidence shows that buying patterns are more moderate and calculated when employees use HRAs.
Normally preventive care benefits are not charged against an HRA, and in addition the unused “funds” of the employee can be rolled in to the following year. When the HRA fund is exhausted, employees usually have a deductible to meet before other medical expenses are reimbursed.
The HealthInsuranceGeeks.com difference is you can shop from all of the market leaders and carriers offering HRA products, as well as standalone vendors that coordinate with insurance carriers.
