![]() HSAs may be funded by employees, by employers, or by both.įor 2022, the HSA contribution limits from all sources rises to $3,650 for single coverage and $7,300 for family coverage (with an additional $1,000 catch-up contribution for account holders age 55 or older).Įmployer contributions are not taxable to the employee. Most HRAs do not pay interest to participants, nor do they allow participant-directed investments. Most HRAs allow the attributed "funds" to accumulate from year to year however, this is not required and is at the employer's discretion. HSA account-holders can invest funds in interest-bearing accounts or, if the administering firm allows it, mutual funds.Īn HRA is a notional account controlled by the employer. ![]() Unspent funds are rolled over to the next year, reducing or eliminating the enrollee’s share of the deductible in subsequent years. HSA funds are "real dollars" in an employee-owned account. Issued final regulations to let employers of any size that don't offer group coverage to fund a premium-reimbursement HRA that employees could use to buy individual-market insurance, known as Qualified small employer HRA (QSEHRA) is only available for employers with fewer than 50 full-time equivalent employees, if the employer doesn't sponsor a group health plan. However, a law enacted at the end of 2016 let a new type of small business stand-alone HRA pay nongroup plan premiums, such as for individual policies purchased by an employee through the Affordable Care Act's Marketplace exchange. HRAs for active employees generally can not be used to pay nongroup (individual-market) health plan premiums.There are no government-set out-of-pocket maximum limits specifically for plans linked to HRAs.HRAs are often coupled with an HDHP but there is no requirement that they must be.Health insurance while receiving federal or state unemployment compensation, and Medicare or Medicare Advantage plans, but not Medicare supplemental (Medigap) premiums. HSAs cannot be used to pay either group or individual-market health plan premiums, although HSAs can pay for COBRA continuation coverage, qualified long-term care insurance,.SHRM Online articles on 2022 HSA/HDHP limits and 2023 HSA/HDHP limits. For 2022, the OOP maximums are $7,050 for self-only coverage and $14,100 for family coverage.įor 2023, the OOP maximums rise to $7,500 for self-only coverage and $15,000 for family coverage. HDHPs have maximum total out-of-pocket (OOP) expenses.For 2022, HSA-linked HDHPs must have an indivdual deductible of at least $1,400, or a family deductible of at least $2,800.įor 2023, HSA-linked HDHP minimum deducitbles rise to $1,500 for individual coverage or $3,000 for a famly plan. HSAs must be linked to a high-deductible health plan (HDHP).That is, generally the plan pays for most of the cost of covered services and the enrollee contributes a cost-sharing amount-which varies by plan-until meeting the maximum out-of-pocket spending limit, at which point the plan pays 100 percent of the cost of covered services. If the account's funds are exhausted before the deductible is met in a given year, enrollees are responsible for paying for the difference out of pocket until they meet the plan deductible.Īfter an enrollee meets the deductible, the plan operates much like a traditional preferred-provider organization (PPO) plan. This article compares HSAs and HRAs, and discusses factors for employers to consider when deciding whether to adopt one or the other, or both.Įnrollees in CDHPs, whether linked to an HSA or HRA, must keep track of funds in their accounts. Consumer-directed health plans (CDHPs) combine a health insurance plan with a tax-advantaged account that enrollees can use to pay for medical expenses-most commonly a health savings account (HSA), a health reimbursement arrangement (HRA) or a health care flexible spending account (health FSA).
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