Understanding The Difference Between An FSA And An HRA
Health spending accounts can be extremely helpful for employees because they can alleviate their burden of paying deductibles and coinsurance, and for employers because they can help make their benefits package competitive. Unfortunately, they can also be confusing. To help you understand what kind of account could be best for your business, here is a brief guide to the flexible spending account (FSA) and health reimbursement arrangement (HRA).
Flexible Spending Account
The employer establishes the FSA, but the employee owns it and gets to decide for which qualified medical expenses he or she will use the FSA to pay. Only the employee and the employer can put money into the account and they can only do so through payroll deduction. The money in the account is not taxed, and the maximum rollover into the next year allowed is $500 (though some employers will not let any money roll over).
Health Reimbursement Arrangement
The employer establishes the HRA and decides which medical expenses will be covered by the arrangement. The money the employer gives to the employee for paying medical bills is tax deductible for the employer, and the employee does not have to pay taxes on it either. The employer gets to decide if money left in the account at the end of the year will be rolled over or given back to the company.
Would flexible spending accounts or health reimbursement arrangements help your nonprofit? To help you understand how these health spending accounts can serve you, contact Colorado Nonprofit Insurance Agency. Located in Denver, our team is here to help Colorado nonprofits get the insurance coverage they need and deserve. Do not lose great employees because your benefits package is lackluster; let us help you build it out. Call us today!
