Types of Reimbursement Accounts
- Flexible Spending Accounts (Healthcare, Dependent Care, and Limited Purpose FSAs)
- Health Savings Accounts (HSAs)
- Health Reimbursement Accounts (HRAs)
What’s the difference between the HSA, FSA, and HRA?
Healthcare FSA
A healthcare FSA is a flexible spending account that allows employees to set aside pre-tax dollars for eligible medical, dental, and vision expenses.
Dependent Care FSA
A dependent care FSA is a flexible spending account that allows employees to set aside pre-tax dollars for dependent care expenses, such as daycare, that allow them to work.
Limited Purpose FSA
A limited purpose flexible spending account (FSA) enables employees to allocate pre-tax funds specifically for dental and vision costs, regardless of whether these expenses are included in their primary health insurance coverage. Employees can enroll in a limited purpose FSA if they are participants in a health savings account (HSA). By using an FSA, employees can reduce their taxable income, as contributions to the account are made before taxes are deducted from their salary. This results in a lower overall tax liability, allowing them to save money while covering essential dental and vision expenses. Additionally, FSAs help employees budget more effectively for out-of-pocket healthcare costs throughout the year.
HSA
An HSA is a personal savings account that allows your employees to set aside pre-tax dollars for current and future healthcare expenses. Employees are eligible to open an HSA if they are enrolled in an HSA-eligible high-deductible health plan.
HRA
An HRA is a reimbursement account set up and funded by the employer that helps employees pay for qualified medical expenses.