HSA, FSA, and HRA - What's the Difference?
May 20, 2019
Healthcare can be expensive, but with tax-advantaged health accounts like HSAs, FSAs and HRAs, you can set aside funds for when you need them. Most decisions about how much to save in these accounts are made during annual benefit enrollment each year, but there are things you can do now to get the most from your savings.
Using Health Savings Accounts
If you elect a High Deductible Health Plan (HDHP), you can contribute to a Health Savings Account, if eligible. Your contributions are not taxed, and you can increase/change your contributions at any time during the year. What you can do now: Watch your account balance.
- If you have more than you think you’ll need for the rest of the year, you don’t need to do anything now. Your unused balance rolls forward next year.
- If you’ve had some unexpected expenses and your balance is low, you can increase your contributions to make sure there’s enough as long as you don’t exceed the annual IRS limits. Remember, it’s better for your “bottom line” if you pay for your healthcare expenses using a tax-advantaged account like your HSA.
- If you haven’t opened an HSA, you can start contributions at any time. And, contributing as little as $26 per year means you receive additional contributions from Ascension. However, you can’t contribute to an HSA and a Healthcare Flexible Spending Account in the same calendar year. So if you already have an FSA for 2019, you’ll have to wait until Jan. 1, 2020 to open an HSA and receive employer contributions.
Using Flexible Spending Accounts
Preferred Provider Organization (PPO) plan participants can contribute to a Healthcare Flexible Spending Account. Your contributions are not taxed and the full amount of your annual election is available on Jan. 1 each year. What you can do now: Track your expenses.
- If you had leftover money from your 2018 Healthcare FSA, then a maximum of $500 can be carried over and deposited in your 2019 FSA. You may have received a carry-over deposit in the last few weeks. It’s a good time to check your balance.
- Since only $500 can be carried over from year to year, it’s very important to monitor your expenses so you can plan for next year. Annual benefit enrollment happens in the fall and having a record of your expenses will make your benefit decisions much easier!
- Mark your calendar. If you have a large unused FSA balance in October, you’ll want to consider spending to bring your balance under $500 before the end of the year. Buy those prescription sunglasses or visit your dentist. There’s no better time to take extra care of yourself and your family.
What about HRAs?
Health Reimbursement Arrangements (HRAs) are accounts for employer contributions only. If you earn Healthy Rewards for completing activities in the SmartHealth Well-being Program, Ascension deposits your rewards into an HRA, if
- You elected the PPO Plan, or
- You elected the HDHP but didn’t open an HSA. (If you have an HSA, your Health Rewards are deposited in your HSA.)
Unused HRA balances roll forward from year to year, as long as you continue to work for Ascension.If you are contributing to a Healthcare FSA, your expenses are paid from the FSA first, and when your FSA account is depleted, the expenses are automatically paid from your HRA.
Have questions about your HRA, HSA or FSA, contact Connect Your Care at 1-844-594-1231.