Health Savings Account (HSA)
A HSA is a special bank account that can help pay for medical expenses on a tax preferred basis. If you have a qualified health plan, you can contribute to this HSA bank account and receive a deduction. The amounts change yearly and are capped based on if you are single or married.
When you use this account for qualified medical expenses, you are using tax free money.
Health Reimbursement Account (HRA)
A HRA is a plan that is established by an employer and can help pay for medical expenses for employees under IRS code section 105. The employer can set aside money to help pay for copays or deductible expenses. Plans are flexible and need to have a plan document. This is not a use it or lose it benefit.
“HSAss are a like a player that comes off the bench. The account is there when you need it and most of us will need it at some point.”
John Gotschall