| |
HRA |
HSA |
| What does it stand for? |
Health Reimbursement Arrangement |
Health Savings Account |
| Who “owns” it? |
Employer |
Employee |
| Who funds it? |
Employer Only |
Employer and/or Employee |
| How is it funded? |
Employer reimburses employee when presented with valid receipt |
Pre-determined amount set aside pre-tax in an account then a receipt is submitted by the employee & is reimbursed by a legally qualified administrator |
| Are there insurance plan requirements? |
No |
Yes. HSA qualified High Deductible Health Plan (HDHP)
2010 Deductible Minimums: $1,200 Individual / $2,400 Family |
| 2010 Maximum Annual Contribution |
None |
$3,050 Individual / $6,150 Family |
| Is it a personal Account? |
It is an arrangement not an account |
Yes and earns tax free interest |
| Are Funds immediately available? |
As funds are credited; may be credited in a lump sum |
As deposits are credited |
| Qualified Medical Expenses |
Generally those defined in Section 213(d) of IRC not covered elsewhere |
| Are distributions for non-medical expenses allowed? |
No |
Yes |
| Is usage for ineligible expenses allowed? |
No |
Yes. Amounts will be included in gross income and subject to 10% penalty, except for those over 65, deceased or disabled |
| Does the unused money carry over? |
At employers discretion |
Yes |
| Is the account portable? |
No. The money belongs to the employer. |
Yes. It is a personal account the money belongs to the employee |
| What are the tax benefits? |
The employer may deduct all qualified reimbursements as business expenses. The employee does not have to claim the reimbursement as income so the money is given to them tax free |
The employer may deduct all qualified employer contributions as business expenses. The employee money is deposited in an account pre-tax through Section 125 plan and can be withdrawn with no tax penalty to pay for qualified expenses. |
| Are dependent care expenses eligible? |
No |
No |
| Does COBRA apply? |
Yes |
No |
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