With healthcare costs rising at an alarming rate, employers and employees are looking to consumer-driven health plans - such as Health Reimbursement Arrangements (HRA), Medical Savings Accounts (MSA), Flexible Spending Accounts (FSA), and the newly introduced Health Savings Accounts (HSA) - for relief.
Frankly, the choices can be confusing. This chart will shed light on the different aspects of each plan and help you find the right one for your unique situation.
|
Question
|
HSA
|
MSA
|
HRA
|
FSA
|
| Who owns the money in the
account? |
Individual
|
Individual
|
Employer
|
Individual (subject to "use it or lose
it" rule at end of plan year)
|
| Can the money be invested
with interest earned? |
YES, tax-free
|
YES, tax-free.
|
NO
|
NO
|
| How is the account funded?
|
.Deposited directly into the account.
|
Deposited directly into the account.
|
As an "IOU" by an employer to
pay employee expenses.
|
Deposited directly into the account.
|
| Is the fund portable? |
YES
|
YES
|
NO
|
NO
|
| Are the funds taxable? |
Contributions are 100% tax deductible. Funds
spent on medical expenses are tax-free for life. At 65, funds
used to supplement income are tax-deferred.
|
Contributions are 100% tax deductible. Funds
spent on medical expenses are tax-free for life. At 65, funds
used to supplement income are tax-deferred.
|
Funds used to pay for medical expenses are
not reported as income.
|
Contributions are 100% tax deductible.
|
| Can the funds be used for
non-medical expenses? |
YES, but they are subject to taxes and a
10% penalty.
|
YES, but they are subject to taxes and a
15% penalty.
|
NO
|
NO
|
| How can an employee access
funds? |
Employee has direct access to funds with
credit card, debit card, checks, or withdrawal form.
|
Employee has direct access to funds with
debit card, checks, or withdrawal form.
|
Employee provides receipt for services.
|
Employee provides receipt for services.
|
| Who can contribute to the
account? |
Both employers and individuals.
|
Employers or individuals, but not both.
|
Employer only.
|
Both employees and employers.
|
| What type of health plan is
required? |
One with a high deductible.
|
One with a high deductible.
|
No requirements.
|
No requirements.
|
| Who is eligible? |
Any employers or individuals under 65 who
have a qualified High-Deductible Health Plan (HDHP).
|
Self-employed and small employers (50 or
less).
|
Current and former employees. No restrictions
on group size.
|
An employee who satisfies the eligibility
requirements established by the employer.
|
| Can the plan be included in
a cafeteria plan? |
YES
|
NO
|
NO
|
YES
|
| Is there a "catch up"
provision for older individuals? |
Yes, starting in 2004, an individual age
55 or older may contribute an extra $500 per year. Provision
increases $100 each year up to 2009, when the contribution
can be $1,000.
|
NO
|
NO
|
NO
|
| Is there a maximum contribution
per year? |
100% of the annual deductible, not to exceed IRS-determined maximums. Pro-rated
by the effective date of health plan.
|
65% of the annual deductible for individuals
and 75% for families. Pro-rated by the effective date of the
health plan.
|
NO. It is an arrangement by the employer
to pay for medical expenses.
|
NO
|
