Financial accounts have become very popular to help offset the cost of high deductible plans for employees. DFA Insurance has its own program to administer Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs).
Health Reimbursement Arrangements
HRAs can be coupled with any type of PPO or HDHP plan. These accounts are owned by the employer and employees can use them to pay for out of pocket health care expenses. The employer has control of the funds and employees do not take them with them if they leave employment. Here are the steps to set up an HRA.
- Choose a health plan
- Determine the amount of money you want to contribute for an employee’s HRA
- Determine what employees can use the money for (deductible only, copays, prescription drugs)
DFA Insurance can work with you to determine the right structure of an HRA based on your needs.
Flexible Spending Accounts
FSAs are special accounts you put money into that you use to pay for certain out-of-pocket health care costs. You don't pay taxes on this money. This means you'll save an amount equal to the taxes you would have paid on the money you set aside. Employees determine what they think their health care expenses will be for the year and determine how much they want to contribute into the FSA. That money is payroll deducted each pay period throughout the year and they can use those funds for healthcare expenses. However, if an employee does not use those funds by the end of the year, they lose whatever is left. So, it is important to budget appropriately. There are limits to what you can contribute to an FSA each year.
Health Savings Accounts
HSAs can only be paired with qualified High Deductible Health Plans (HDHPs). These accounts are owned by the employee and they can use the funds to pay for healthcare services. An employer can choose to contribute to employees’ HSAs but the employee owns those funds and can take them with them if they leave employment. All contributions are pre-tax. Each year they set the amount of money that can be contributed to HSAs.