|
Health Savings
Account (HSA) |
Health Reimbursement Account (HRA) |
Flexible Spending
Account (FSA) |
Establishment of Account |
• Eligible Individual
• Employer
• Integrate With Employer-Sponsored Cafeteria Plan
|
Employer-Sponsored Benefit Program |
Employer-Sponsored Benefit Program Via Cafeteria Plan |
Account Type |
Trust Or Custodial Account |
• General Assets Of Employer
• Trust
|
• General Assets Of Employer
• Trust
|
Control and Ownership of Account |
Employee |
Employer |
Employer |
Account Portability |
Yes |
No |
No |
High-Deductible Health Plan(HDHP) Required |
Yes |
No |
No |
Eligibility |
• Eligible Individual Covered By HDHP
• Eligible Employee Covered By HDHP
|
Employee Who Meets Employer’s Eligibility Criteria |
Employee Who Meets Employer’s Eligibility Criteria |
Funding |
• Individual
• Employee Salary Reduction Dollars
• Employer
• Third Party
|
Strictly By Employer |
• Employee Salary Reduction Dollars
• Employer
|
Account Limits |
Individual —
Lesser Of
Deductible Amount ($1,050+) or $2,700
(For 2006)
Family —
Lesser Of
Deductible Amount ($2,100+) or $5,450
(For 2006)
|
No Statutory Required Limit |
No Statutory Required Limit |
Annual Out of
Pocket Limits |
• $5,250 Individual
(For 2006)
• $10,500 Family
(For 2006)
|
N/A |
N/A |
Required Pre-Funding |
Yes |
No |
Yes |
Disbursement of Money |
Checks, Debit Card, Withdrawal Slips |
Reimburse Through Employer |
Checks, Debits, Withdrawal Slips |
Qualified Medical Expenses |
• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs
• Retiree Health Insurance Premium Other Than Medicare Supplement Policies
• COBRA Premium
• Long Term Care (LTC) Insurance Premium
• Health Insurance Premium If Receiving Unemployment
Not Permitted:
• Any Other Type Of Health Insurance Premium
|
• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs
• Health Insurance Premium, Including LTC Premium
|
• Qualified Medical Expenses As Defined In IRC §213(d), Including Over-The-Counter Drugs
Not Permitted:
• Health Insurance Premium, Including LTC Insurance Premium
|
Tax Treatment of Contributions |
• Individual’s Contributions To Own HSA Tax-Deductible
• Employee-Contributions To Employee’s Own HSA Are Tax-Deductible
• Employer-Contributions To Employee’s HSA (With Or Without Cafeteria Plan) With Salary Reduction Dollars:
- Deductible By Employer
- Excludable From
Employee’s Gross Income
|
• Only Employer Contributions Permitted:
- Deductible
By Employer
- Excludable From Employee’s Gross Income
|
• Only Employer Contributions Permitted:
- Deductible
By Employer
- Excludable
From Employee’s Gross Income |
Taxation of Interest or Dividend Accumulation |
Tax-Free |
N/A |
N/A |
Consequences of Cashing Out Account for Non-Qualified Medical Expenses |
Distributions Are Taxed As Income And Subject To 10% Penalty Tax, Except the Following:
- Death
- Disability
- Attainment Of Medicare Eligibility Age
|
No Cash-Out Option Available |
Some (Section 125 Rules Apply) |
Carry-Over of
Funds Permitted |
Yes |
Yes
(Employer Decides) |
No |
Death of Account Holder |
Surviving Spouse Only (If Designated Beneficiary) Entitled To Use Remaining Account Monies For Qualified Medical Expenses |
Eligible Dependents Entitled To Use Remaining Account Monies For Qualified Medical Expenses, In Accordance With The Plan Document |
Eligible Dependents Entitled To Use Remaining Account Monies For Qualified Medical Expenses, In Accordance With The Plan Document |
Applicability of ERISA |
No |
Yes |
Yes |
Subject to COBRA |
- No, If Not Employer-Based
- Unclear, If Employer-Based
|
Yes |
Yes |
Effective Date |
1/1/2004 |
6/26/2002 |
3/7/1989 |
Notes: Amounts listed are indexed annually. Plus there is an additional catch-up provision for individuals 55+ years, $700 in 2006 increasing $100 per year to $1,000 in 2009 and thereafter.
Source: Information Strategies Inc.
