HSA or HRA?
June 11, 2008 by Bill MeltzerPosted in: Consumer-driven health care, Health Reimbursement Accounts (HRAs), Health Savings Accounts (HSAs), In this week's e-newsletter, Latest News & Views
Is the conventional wisdom on consumer health plans wrong?
There’s a common belief that employees prefer health reimbursement accounts to health savings accounts. The reason, of course, is that employers fund HRAs. Employees pay for HSAs themselves.
But a recent study suggests that employees see things differently. A study of 130 organizations with multiple health plan choices - including an HRA and HSA — found that more workers chose the HSA over the HRA.
The reasons: portability and versatility. Unlike an HRA, employees can take an HSA with them if they
leave the organization. And, for HRAs, employers set the rules for which medical services employees can and can’t be reimbursed for.
With an HSA, the account’s use is entirely up to the employee and can be accessed via a credit/debit card tied to the account. Unfortunately, some folks misuse HSA funds and use the money for non-medical purchases (in response, Congress is weighing a proposal to put tighter controls on people’s access to HSA money).
June 18th, 2008 at 2:57 pm
We are a small non-profit and HSA attached to a high deductible health plan was a no brainer for us in order to save major costs. After the initial shock of the employees realizing that they will now have to be an active participant in managing their health care plan and costs, they saw the win-win benefit. We were also able to mini step into the HSA high deductible with a plan that did not subject perscriptions to the deductible. This helped those who are on maintenance drugs.
June 18th, 2008 at 6:20 pm
We are a smaller company of about 35 employees. We switched from a fully funded plan to a high deductible partially self funded plan. This plan has been great and such a money saver with no hassle. The company pays the deductible for the employees through a 3rd party administrator. Once the employees got over the shock of having to participate by faxing their EOB’s, everything has run smoothly. No HSA or HRA headaches and it has saved the company tens of thousands of dollars.
August 11th, 2008 at 9:53 am
As a third party administrator, we adminster HRA’s and many other products that are tied to HSA’s. Through our experience we are finding that both HRA’s and HSA’s save employers money. The difference with an HRA is that the employer keeps the money until it is called on for claims. If employers fund an HSA, the funds are given to employees and that money is then gone.
With either product, employee education is key. The more employees understand the benefits offered, the less hassle and the greater the level of satisfaction with the benefit.