FSA vs HSA vs HRA
Flexible spending accounts (FSAs) provide you with a tax advantage to help pay for health care and dependent care. As an employee, you set aside a portion of your pre-tax salary in an account, and that money is deducted from your paycheck throughout the year. Consider the following types of FSAs:
- Health care reimbursement FSAs can be used for your deductible, copayments, and eligible health care expenses, including prescription drugs, dental costs, eyeglasses, and contacts.
- Dependent care FSAs let you use pre-tax dollars toward qualified dependent care, such as the cost of nursery schools.
FSAs are beneficial if you have out-of-pocket medical, dental, vision, hearing, or dependent care expenses beyond what your insurance plan covers.
A health savings account (HSA) is a tax-exempt savings account established for the purpose of paying for the qualified medical expenses of an individual and/or his or her spouse and tax dependents. HSAs are designed to provide eligible individuals with the following federal tax benefits:
- HSA contributions are tax-free.
- Interest and other earnings on HSA contributions accumulate tax-free.
- Amounts distributed from an HSA for qualified medical expenses are tax-free as well.
A health reimbursement arrangement (HRA) is an employer-funded account that is designed to reimburse employees for qualified medical expenses that are paid for out-of-pocket. There are no annual contribution limits on HRAs. However, the employer usually sets the contribution below the annual deductible. HRAs are employer-established benefit plans. These may be offered in conjunction with other employer-provided health benefits. Employers have complete flexibility to offer various combinations of benefits in designing their plans.
Benefits debit cards are a valuable asset if you participate in flexible spending accounts (FSAs), health savings accounts (HSAs), or health reimbursement accounts (HRAs). These cards allow you to easily pay for health and medical expenses with the swipe of a card.
These convenient transactions are made possible by an Inventory Information Approval System (IIAS), which allows a retailer to automatically verify eligible FSA and HRA purchases through their own inventory control system (e.g., UPC or SKU number).
The following locations accept benefits debit cards:
- Health care, dental and vision providers
- Retailers with an IIAS
- Healthcare-related retailers that have an IIAS or sell mainly medical care items
Contact our Employee Benefits to find out what options are best for you and your team.