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Comparison Chart for Health Savings Account (HAS), Health Reimbursement Arrangement (HRA), and Health Care Federal Spending Account (HCFSA) HSA HRA HCFSA What does the Health Savings Account Health Reimbursement Health Care Flexible acronym stand Arrangement Spending Account under for? the FSAFEDS Program Legal Authority Medicare Prescription IRS Guidance 2002-45 IRS code Section 125 Drug, Improvement, & Modernization Act of 2003 and supplemental guidance from the IRS Who is eligible? The FEHB member must be The FEHB member must Federal employees (in enrolled in a High be enrolled in an HDHP executive branch Deductible Health Plan and not qualified for an agencies and other (HDHP). The member may HSA agencies offering not be enrolled in other FSAFEDS) who are general medical insurance eligible for the FEHB coverage, an FSAFEDS Program (whether or not Health Care Account, or enrolled in FEHB) are Medicare and may not be eligible for an HCFSA claimed as a dependent on another person's tax return (but may be a spouse filing jointly). Who "owns" it? FEHB member The health plan Employee PORTABLE The health plan's monthly The health plan credits a The employee funds the "premium pass through" is portion of the premium to account. The employee deposited into the the HRA. Some plans may makes an annual election member's account. credit the annual amount (up to $4000 for 2005). Individual voluntary at the beginning of the The election is divided contributions can be made plan year. Individual into allotments based on directly to the account to contributions are not the number of pay dates bring the account to the allowed. in the plan year. Every maximum amount, pay date, an allotment is generally the plan's deposited directly into deductible. the employee's HCFSA account. Will my balance No. The health plan's credits Yes. Unused balances are be forfeited must be used while the forfeited annually. after a certain member is covered by Expenses must be amount of time? that plan. Unused credits incurred by year's end are forfeited if the (or by termination of member terminates employment, if before employment, (other than year's end). Otherwise, retirement) or changes the employee loses health plans. unused funds. Can unused Yes. The FEHB member Yes. Unused credits carry No. The employee must amounts carry owns the account and any over year to year as long incur expenses by year's over from year contributions made to it, as the FEHB member end (or by termination of to year? regardless of the source or remains in the sponsoring employment, if before timing of the contribution. health plan. year's end) and submit a request for reimbursement no later than April 30 following the end of the plan year. What type(s) of HSAs are only available HRAs are available with Any type of health plan corresponding with an HDHP. An HDHP an HDHP for those not arrangement is allowed. health plan is has: eligible for an HSA. Employees who are not allowed? enrolled in FEHB but who a minimum annual are eligible to participate deductible of $1,050 in FEHB can enroll in an for Self and $2,100 for HCFSA. Self and Family coverage and a maximum annual out of pocket limit of $5,000 for Self and $10,000 for Self and Family. Amounts/limits are indexed for inflation. Is the account Yes. The FEHB member Credits in an HRA are Only if the employee portable? owns the account and forfeited if the member transfers between keeps the account even if leaves Federal agencies that both the member changes employment (except for participate in FSAFEDS. health plans or leaves retirement) or changes Federal employment. plans. Does interest Interest accrues on a tax- Credits in an HRA do not Interest does not accrue. accrue? free basis in qualified earn interest. HSAs. Who determines The health plan determines The health plan The employer determines the contribution the amount of the annual determines the portion of the minimum and amount? "premium pass through." the health plan premium maximum annual amount Individual voluntary credited to the HRA. The that each employee can contributions plus the credit to the HRA is not contribute. Within these annual "premium pass taxable income to the amounts, the employee through" may not exceed FEHB member. Individual decides how much to the total annual contributions are not contribute. Under contributions allowed, allowed. FSAFEDS HCFSA, for generally the amount of 2005, the minimum the plan deductible. annual contribution is $250 and the maximum is $4,000. Is there a "catch Yes, FEHB members from No. No. up" contribution ages 55 up to age 65 may provision for contribute more to their older workers? account per year, until they are enrolled in Medicare (age 65). In 2005 an additional $600 contribution is allowed, increasing $100 per year until the contribution reaches a cap of $1,000 in 2009. These contributions are in addition to the plan's deductible and are "above the line" deductions on the member's Federal income tax. Will my salary No, some agencies may be Not applicable. Yes. contributions be able to support HSA a pre-tax allotments but not on a reduction to pre-tax basis. fund my account? What is the tax An FEHB member's Reimbursements are Employee contributions treatment for voluntary contributions are limited to qualified to an HCFSA are pre-tax FEHB members? tax deductible, up to the medical expenses and are and therefore reduce annual maximum allowable tax-free. annual taxable income, amount. Account including FICA taxes. distributions are tax-free Reimbursements are only as long as funds are spent allowed for eligible on qualified medical medical expenses. expenses. What expenses Qualified medical expenses Qualified medical Qualified medical qualify for defined under §213(d) of expenses defined under expenses defined under distribution? the Internal Revenue Code §213(d) of the Internal §213(d) of the Internal (IRC), except for amounts Revenue Code (IRC) Revenue Code (IRC), distributed to pay health (including health care, except for amounts paid insurance premiums. HSAs over-the-counter for health insurance can be used to pay medications, Medicare premiums and Long- premiums for (1) insurance premiums and Term Care Insurance Temporary Continuation of qualified Long Term Care premiums, but including Coverage (TCC), (2) Long Insurance premiums) most over-the-counter Term Care Insurance (3) except for medical medicines and products. retiree health insurance expenses explicitly premiums including prohibited from Medicare after age 65 (4) reimbursement by FEHB health insurance premiums law. while receiving unemployment compensation and (5) over-the-counter medications. Can funds be Yes, but non-health care No. No. used for non- distributions are included medical in gross income and expenses? subject to a 10% penalty if under age 65. Must a medical No. However, no No. However, no Yes. Expenses must be expense be reimbursements can be reimbursements can be incurred during the plan incurred during made for expenses made for expenses year of the contribution the plan year incurred prior to the incurred prior the in order to be eligible for that the establishment of the effective date of plan reimbursement. contribution is account. enrollment. made? Is the annual No. Only the amount of the It depends on the way the Yes. The annual amount amount of the accumulating health plan health plan chooses to the employee elected is contribution monthly "premium pass administer this benefit. available on the first day available on the through" and the of coverage regardless of first day of individual's voluntary the amount contributed coverage? contributions to date are by the date of the available for reimbursement request. reimbursement. Is proof of No. The member should be Yes. IRS regulations Yes. IRS regulations expenses prepared to substantiate to governing HRAs require governing HCFSAs required? the IRS that the expense that each claim be require that each claim has been incurred, the substantiated by an be substantiated by an amount of the expense, "explanation of benefits" "explanation of benefits" and its eligibility. statement or through statement or through itemized receipts. itemized receipts. Some expenses may require a letter of medical necessity from the employee's physician. Can it be No. If the FEHB member is Yes. If the FEHB member No. integrated with enrolled in an HDHP with is enrolled in an HDHP other accounts, an HSA, participation in a with an HRA, participation i.e. an FSA or general HCFSA is not in an HCFSA is allowed. HRA? allowed. Also, if HSA eligibility is lost during the plan year, the member may then have an HRA.
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