HRA vs. HSA vs. FSA

[NookOfTheNorth]

I know I don't post often, really much more of a lurker. But, I was wondering if anyone knows of any forums that discuss High Deductible Health Plans and all they other stuff that goes along with them?
I have done a ton of research and looked over the IRS publication 969, but I'm not going to lie to you, I feel like I'm reading Greek.

Here's the basic info.

My employer is changing to an insurance plan with a $4000 deductible (the employee responsible for $2000). The employer will fund a Health Reimbursement Account (HRA) with $2000. So, we will be responsible for the other $2000.

The employer says we need to use post tax dollars or our Flexible Spending Account (FSA) for the other $2000, but that is really a crap shoot. What if we do not use that money because we have a healthy year? Then it's gone--particularly with the new limits on OTC medications and FSAs. Along that same line, I know that the limits on FSAs are going down to $2500 in 2013, that leaves very little leeway for things like braces, eyeglasses, prescriptions, etc.

I also know that a Health Savings Account (HSA) is an option as well. Can we, the employees, open an HSA separate from the employer funded HRA? If so, how could those funds be used? Would it have to be the first $2000 of the deductible? Unlike my FSA, I know I need to have the funds in the HSA account before it can be used.

The insurance rep is telling us (the employees) that we cannot have an HSA, because the company doesn't have a compatible plan? That really confuses me. According to the IRS, a high deductible plan has a minimum $2400 and ours is $4000. Well, I now think I get this. It has to do with how our deductible is applied. Which stinks because it makes this an ineligible HDHP.

I have also read about Limited FSAs that can be used in conjunction with HRAs or HSAs.

I guess my head is spinning and we really have no expert that will explain this to us in layman's terms. Grrr.

So, if there is a site you can point me to or an expert I can contact, I would really appreciate it. I would like to have the right questions to ask my employer so this can be clear for everyone.

Thanks in advance,

Nook

 

[bumbershoot]

This is only my understanding and experience.

DH's company offers the HRA. And no, we cannot have our own HSA.

Flex plan is always a bit of a gamble. I ended up NOT using the flex plan when we had the HRA, because, well, I can't recall why, but I just remember it not working when we tried it.

I basically liked the HRA, especially the fact that the employer funded part of it (and with DH's company, that money could roll over if you didn't use it/all of it). But just after I got used to it, DH got an annoying diagnosis which means we would always, for the time being, be using all of the employer-given money, but not *quite* all of the next amount...so we were never getting *into* the "insurance" part of it all. (Dh's company also offers normal insurance plans so we switched to the PPO at that point)


From what I've noticed, HRAs are relatively rare; I almost never see people talking about them online.

 

[mickeyplanner08]

My husband's plan is a HRA. It is mostly annoying because we don't "own" that money, his company does. They can also set the rules and the rules at his company state it can only be used for medical expenses. He carries him and the kids. No dental or vision, so I couldn't use it for my son's ortho stuff.

I, on the other hand, have a HSA through my employer. I have a $1200 individual deductible with a $2000 out of pocket maximum. This year the company funded the whole $1200 for full-time employees, and it was still cheaper for them than our traditional insurance we had in previous years. We can then add money up to the $3050 maximum for an individual. This is all "my" money once it is deposited into the HSA account. I own it, not my employer. SO, I put money into it (pre-tax) and used it for my son's ortho stuff. I can use the money for immediate family.

I do not know that you can set up your own HSA. I think it has to be administered through your employer or insurance plan, and if they have it set up with a HRA then you don't get the HSA benefits.

A FSA is really your only option to put money away pre-tax if you have a HRA, but it is in a use-it-or-loose-it set up. Not as nice as the FSA which rolls over and accumulates year to year.

OK, probably more greek than help, but I tried

 

[Coll0610]

We have an HRA - $5000 deductible and my employer puts in $2000 a year in our HRA. Anything out of that $2000 that we don't spend rolls over to next year. (There is a limit to how high it can go but I think it's like $20,000.) So far, we have not had to spend any money out of pocket. Our plan covers preventative care at 100%, and we haven't had much else (just a few sinus infections, things like that). After the $5000 deductible, insurance pays 80%. There is also a maximum out of pocket that we could have to pay in a year.

We can also choose from a couple of other plans without the HRA or an HMO but the premiums are MUCH higher. A coworker actually calculated the total out of pocket cost (premiums, deductible and copays) for different scenarios and it was almost always cheaper to go with the HRA plan, no matter what kind of expenses you had that year - even including a worse case scenario like hundreds of thousands of dollars in expenses.

So check and see if your employer contribution rolls over from year to year. If it does, you just need one or two good years to build up a cushion. Also plan to put the difference in premiums in a savings account until you have saved enough to cover the maximum possible out of pocket - kind of like an emergency fund.

As far as the FSA, remember that you can use it to pay for contact lenses and solutions so you could stock up on those if you had extra money. We can also use ours to pay for over the counter medicines if the doctor prescribes them for a specific condition so that could be an option too.

One more thing - my HR department said our high deductible plan didn't qualify for an HSA because the prescription coverage was too good.

 

[wdwnomad]

I am not sure how much I can add to this as I was just going through the same thing. My employer now offers a HDHP with an HSA. I am not familiar with the rules of an HRA. However, we were told that if you signed up for the HDHP with the HSA you can not have an FSA.