HSA, HRA, FSA; what are these and how can they help me?
HSA; Health Savings Account. Do you have an IRA account? Well this is pretty similar. You must have an HDHP insurance plan to be allowed to put money into your HSA account. Because the cost is lower, the savings should be placed into this special bank account each year by either you and/or your employer. Dollars are not taxed going in and they are not taxed going out if they are spent on qualified medical expenses. If you need it, you will have the money set aside for meeting the high deductible. If you don’t need it, you get to keep this money and earn interest on it. Hopefully this will grow each year and can be another form of retirement income. Click here to read more about HSA accounts and HDHP plans.
HRA: Health Reimbursement Arrangement. This is only done in conjunction with employer sponsored group plans. HRA is coupled with certain HDHP plans. The employer holds a reserve of funds to reimburse employee medical expenses as needed. These expenses usually fall below the HDHP deductible. Because the HDHP premiums are lower, the savings are meant to help fund the employer reserve account.
FSA; Flexible Spending Account. This is not tied to a particular heath plan like the others. Plan is set up by your employer. Part of your paycheck is set aside to pay certain qualified fixed expenses. This is “use it or loose it”! May help to save on your taxes.