Comparison Chart for Health Savings Account _HAS__ by fionan


									   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
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
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

                    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.
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
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.
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
                   compensation and (5)
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.
 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.
  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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