Which solution(s) should I choose? Comparing FSAs, HSAs and HRAs

Comparing FSAs, HSAs and HRAs

Remember the old saying “There’s an app for that?” In the case of pre-tax benefits, we like to say “There’s a plan for that”.

Regardless of your benefits problem, by comparing Flexible Spending Accounts, Health Savings Accounts and Health Reimbursement Accounts, you can find the right plan to fit your needs.

Congress has developed a variety of solutions to provide individuals and employers with tax-free solutions for financing health care expenses. Each solution has unique advantages designed to meet the diverse needs of individuals and employers.

First, what can you do if you are faced with rising premiums this year?

Problem: Increasing premiums

Recommendation: Health Savings Account or Health Reimbursement Account

A HSA with an HSA-compatible health plan typically has more affordable premiums while the HSA provides an ideal tax benefit.

An HRA with a higher deductible health plan can also provide savings opportunities for employers while providing more flexibility in the design of the health benefits.

Problem: High turnover

Recommendation: Health Reimbursement Account

An HRA allows you to provide a benefit to your employees with minimal risk of lost funds if an employee leaves mid-year.

Problem: Large employee expenses early in year

Recommendation: Medical Flexible Spending Account

A Medical FSA allows employees to manage large medical expenditures with an upfront allocation that is paid throughout the year.

Problem: Benefit to attract employees

Recommendation: Health Savings Account

An HSA provides an additional long-term savings vehicle similar to a 401K where funds carryover, can be invested and can be taken with employees when they leave.

Problem: Unique employee benefits needs

Recommendation: Health Reimbursement Account

An HRA allows an employer increased flexibility to design a unique reimbursement structure.

Problem: Varying insurance products

Recommendation: Medical FSA or HSA with Limited Medical FSA

A Medical Flexible Spending Account can allow employees to set aside tax-free dollars regardless of the insurance offered.

Health Savings Account with a Limited Medical FSA will allow employees with an HSA-compatible health plan to take advantage of the benefits of an HSA while providing incremental savings towards known dental and vision expenses.

Comparing FSAs, HSAs and HRAs

By comparing FSAs, HSAs and HRAs, you can almost always find the right solution to your benefits problem. If you want to learn more about options for your company this Open Enrollment, contact your Benefits Specialist.

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