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The financial tools in your health plan can have a big impact on your health care experience. We’re here to help you feel more prepared for expenses, as well as help you understand the types of financial accounts your employer offers and what they mean for you.
Health Financial Accounts: What Are the Differences?
|
HSA Health Savings Account |
HRA Health Reimbursement Arrangement |
FSA Flexible Spending Account |
|
|---|---|---|---|
| How does it work? | Pre-tax dollars you contribute from your paycheck automatically go into an HSA, which is used to pay out-of-pocket health care costs. Your employer has the option of contributing. | Your employer contributes tax-free funds to help you pay for health expenses. | Pre-tax dollars you contribute from your paycheck automatically go into an FSA, which is used to pay out-of-pocket health care costs. Your employer has the option of contributing. |
| What can I use it for? |
HSA-eligible expenses, as defined by the Internal Revenue Service (IRS), including deductibles, copays, prescription and non-prescription medications, dental and vision care, and more. |
Out-of-pocket medical expenses your employer decides are eligible, such as deductibles, and medical and prescription copays. |
FSA-eligible expenses, including deductibles, copays, prescription and non-prescription medications, dental and vision care, and more. |
| Why should I consider it? | This may be a smart choice, whether you want to pay for health care expenses now or want to save for down the road and into retirement. | You may want to take advantage of tax-free funds to help pay for your health care expenses. | This may be a wise choice if you know you'll have health expenses this year and want to budget for them. |
| How much can I contribute to my account? | Refer to Internal Revenue Service (IRS) for the maximum contribution amount for the current tax year. | This is determined by your employer. | Refer to Internal Revenue Service (IRS) for the maximum contribution amount for the current tax year. |
| Who owns the account? |
You. Your HSA stays with you if you change jobs. |
Your employer (if you leave the company, the money stays with your employer). | Your employer. |
| What are the tax benefits? | Tax-free contributions and withdrawals, tax-deferred growth. | Money contributed by your employer is tax-free to you. | Tax-free contributions. |
| What are other benefits? |
Your savings build and earn tax-free interest (interest isn't tax-free for residents of NJ). After age 65, you can withdraw HSA funds for any use without penalty. |
Your employer helps cover your expenses. |
You decide how much money to set aside in your FSA for the year. Your full FSA balance is available to you at the start of your plan year. |
| Do unused funds roll over at the end of a year? | Yes, your funds roll over annually. | They may not. Your employer chooses whether to allow funds to carry over each year. | They may. Your employer determines whether unused FSA funds up to $570 a year can roll over. |
| When are funds available? | Once your account is open and a deposit has been made, you can start using your HSA. | Your employer decides how and when you can use your HRA funds. You may need to pay an out-of-pocket minimum before funds become available. | You have access on the first day of your plan year to the total amount you elected to save in your FSA, even if you haven't yet contributed the full amount. |
| Can funds be invested? | Yes | No | No |
Know your health financial accounts
Health Reimbursement Arrangements
Let’s lay it all out
First, HRA stands for health reimbursement arrangement.
It means your employer will help pay for some of your out of pocket costs. Great, right? Here’s how it works.
Think of an HRA like an extra pocket of money your employer gives you for health expenses.
So if your deductible is 2,000 dollars, and your employer gives you 1,000 dollars…
Now you have to cover 1,000 dollars less out of your own pocket.
You may be able to use your HRA to pay for health expenses like prescription copays, dental cleanings, or even physical therapy.
Check with your employer to see what they cover. No matter what, your HRA is always tax free. So no surprise costs at the end of the year.
Now that you’ve got your HRA down, sign in to MyBlue or download the MyBlue app to learn even more about your plan.
Health Savings
Account
Let’s lay it all out.
HSA is shorthand for health savings account.
And just like it sounds, it will help you save and pay for health care expenses tax free.
You can contribute money to your HSA to pay for health expenses like x-rays, broken ankles, and even everyday health stuff like sunscreen. As long as your current balance covers the expense, you can spend it!
Your HSA is your own personal financial account, so money you don’t use will rollover every year, and your account stays with you, even if you change employers.
You can even invest the money to help pay for health costs later in life.
And, like we said, there’s no federal income tax on your contributions or your investment earnings.
You can spend tax-free too, as long as you’re paying for health care expenses.
Now that you’ve got a handle on your HSAs, sign in to MyBlue or download the MyBlue app to make the most of your health plan.
Flexible Spending
Account
Let’s lay it all out
FSA stands for flexible spending account.
It’s a health care account you might get through your employer.
And it’s tax free!
You can use your FSA to pay for certain eligible expenses like dental bills, prescriptions and even taxis to medical visits. Here’s how it works.
First, you’ll tell your employer how much you want to put into your FSA for the plan year, up to the IRS limit. Let’s say it’s 1,000 dollars.
That 1,000 dollars will be available on the first day of your plan year. Woo hoo! You can use all of it right away.
Your employer will take money of out of your paychecks until it adds up to 1,000 dollars.
It’s all pre-tax too!
FSAs are typically use it or lose it, but you may be able to rollover some of it, so check with your employer.
Now that you’re up on FSAs, sign in to MyBlue or download the MyBlue app to discover even more about your plan and stay one step ahead.
Keep tabs on your medical tab
Track your deductible, spending account balance, discounts and more — all in one place, all on your phone. Sign in or create a MyBlue account to see your personal Year-to-Date Summary. It’ll keep you two steps ahead.