Differences Between HRA vs. HSA
The following table presents the differences between an HRA and an HSA, both associated with enrollment in an HDHP that is available to employees in the Federal Employees Health Benefits (FEHB) program:
HRA Versus HCFSA Versus HSA Comparison
The following table presents a comparison of an HRA, a health care flexible spending account (HCFSA) and an HSA:
Health Savings Account (HSA)
Health Savings Accounts (HSAs) are available to members who enroll in a high deductible health plan (HDHP), are not enrolled in Medicare or another health plan, and are not claimed as a dependent on someone else’s Federal tax return. The health plan passes through a portion of the health plan premium as a deposit to the HSA each month. The pass through contribution amount is different for a Self Only enrollment than for a Self Plus One or Self and Family enrollment. You have the option to make additional, voluntary tax–free contributions to your account, up to the maximum established by law. Federal employees who are enrolled in HDHPs can make pre–tax allotments to their HSAs through their payroll provider or through their health plan’s HSA trustee.. The funds in your HSA can be used to pay for your cost share for your deductible or other qualified medical expenses.
Features of an HSA include:
Your own HSA contributions are tax–deductible or pre–tax (if made by payroll deduction). See IRS Publication 969(external link)(PDF file).
Interest earned on your account is tax–free
Withdrawals for qualified medical expenses(external link) are tax–free
Unused funds and interest are carried over, without limit, from year to year
You own the HSA and it is yours to keep — even when you change plans or retire
Your HSA is administered by a trustee/custodian
Limited Expense Health Care Flexible Spending Account (LEX HCFSA)
FSAFEDS offers a Limited Expense Health Care Flexible Spending Account (LEX HCFSA) for eligible employees in FEHB high deductible health plans (HDHP) with a health savings account (HSA). Under IRS rules, federal employees enrolled in high deductible health plans (HDHP) with health savings accounts (HSA) are unable to have a healthcare flexible spending account. However, they are able to enroll in a limited expense health care flexible spending account (LEX HCFSA) to help cover their eligible dental and vision care expenses. .
WageWorks, Inc. (the third party administrator for FSAFEDS) administers the LEX HCFSA accounts.
To enroll in a LEX HCFSA (during the annual Federal Benefits Open Season or within 60 days after becoming a newly hired or newly eligible employee), go to www.FSAFEDS.com(external link).
Health Reimbursement Arrangement (HRA)
If you select an HSA-qualified high deductible health plan (HDHP) and you are not eligible for an HSA, you will be given an HRA. This is not a bank account, but a virtual fund that receives the premium pass through credits from your health plan. The premium pass through credits are the same as the HSAs in the same plan. Most health plans credit the funds to the HRA on an annual basis in January. Funds in your account will help pay your qualified medical expenses, including Medicare premiums or other qualified medical expenses not covered by your health
Features of an HRA include:
Tax-free withdrawals for qualified medical expenses
Carryover of unused credits, without limit, from year to year
You can have an HRA if you’re enrolled in Medicare or a healthcare flexible spending account (HCFSA)Credits in an HRA do not earn interest
Credits in an HRA are forfeited if you switch health plans, or if you leave federal employment other than to retire
Your HRA is administered by the health plan
You cannot make voluntary contributions to the HRA