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Summary of Consumer Driven Health Plans

Health FSA

A Health Flexible Spending Account (FSA) is a tax arrangement authorized under Section 125 of the Internal Revenue Code that allows for pre-tax funding of an account (via participation payroll reductions or employer contributions) to cover eligible health care expenses, as definted within the parameters section 213(d). Because FSA deposits escape federal income taxes, participants can pay for health care expenses with pretax dollars, but they forfeit any unused funds not used within the allowed plan year date range.

Eligible Health Expenses may include Medical, Vision or Dental expenses, as defined by the plan document in place for each employer (plan sponsor).

Dependent Care FSA

A Dependent Care Flexible Spending Account (FSA) is a tax arrangement authorized under Section 125 of the Internal Revenue Code that allows for pre-tax funding of an account (via participant payroll reductions or employer contributions) to cover eligible child or adult dependent care expenses not covered or reimbursed by any other source.

Health Reimbursement Arrangement (HRA)

A Health Reimbursement Arrangement (HRA) is typically offered in conjunction with a deductible health plan, and is funded by the employer for each participating employee. It covers eligible health care expenses, as defined by the plan within the parameters section 213(d). Unused funds can be carried over to the next year to cover future health care expenses. If funds are exhausted, the employee is responsible for satisfying the remaining health plan deductible before the health plan begins to pay. If the employee changes jobs, the money stays with the employer. HRAs are governed by IRC Section 105.

Sample HRA Plan Design

hra-plan-design-sample


HRA with Deductible

A Health Reimbursement Arrangement (HRA) where the employee is responsible for meeting a minimum required deductible prior to employer funds within the HRA becoming available for reimbursement. All other rules of the HRA apply.

Sample HRA with Deductible Plan Design

hra-deductible-plan-sample

HRA with Coinsurance

A Health Reimbursement Arrangement (HRA) designed with a cost sharing arrangement in which a participant pays a certain percentage of each claim that is eligible for reimbursement from the HRA plan - for example, the employee pays 20% toward the charges for a service and the HRA pays 80%. All other rules of the HRA apply.

Sample HRA with Coinsurance Plan Design

hra-coinsurance-plan-sample

HRA with Copayment

A Health Reimbursement Arrangement (HRA) designed with a cost sharing arrangement in which a participant pays a fixed amount of out-of-pocket for designated expenses and/or services and the HRA covers the remaining amount - for example, participant is responsible for $10 per presciption or $20 per doctor's office visit. All other rules of the HRA apply.

Sample HRA with Copayment Plan Design

hra-copayment-plan-sample

Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-free account with money deposited by individuals, employers or both to pay for out-of-pocket health care expenses (including medical, vision or dental expenses under Section 213(d) of the Internal Revenue Code).

The account partners with a qualified, inexpensive, high-deductible health plan (HDHP) to pay for catastrophic medical care in case of major accident or serious illness. HSA's create a financial incentive to spend dollars wisely, because unspent dollars accumulate tax-free in their own personal accounts. This encourages consumers to shop around, compare prices and providers, and select the medical services that are most important for them.