The answer, of course, depends on your needs. But before you can choose, you need to understand the similarities and differences between both types of consumer-directed plans.
Both are generally offered with deductible-based health plans, which encourage members to become more involved in their own health care decisions by giving them more control over how and when they spend their health care dollars. A member can only contribute to an HSA while enrolled in a high-deductible health plan (HDHP). The minimum deductible amounts for an HSA-eligible HDHP are established by the Treasury department each year. These plans also give members the information and resources they need to help them make informed health care decisions for themselves and their families, while helping lower employers’ costs.
What’s the difference?
Another significant difference involves how the two types of accounts are funded. The money in an HRA is provided solely by the employer. HRAs are usually unfunded notional accounts, with no cash value. An HSA is a tax-advantaged account that can be used to pay for IRS-defined health care expenses, including long-term care and COBRA premiums. Anyone can contribute to an HSA, including the employer, the employee or a family member. However, there is an annual maximum contribution amount that is established by the U.S. Treasury.
Click here for a chart that compares HRAs and HSAs with each other, as well as with flexible spending accounts (FSAs) and Retiree Reimbursement Accounts (RRAs).
To help you determine which is best for a particular client, here are the specific advantages of each type of fund.
Advantages to plan sponsors
Advantages to members
The Aetna HealthFund® family of products includes both HRAs and HSAs. Your broker or Aetna representative can help you determine which is the best option for you. You could also choose to offer both to your employees.Click here for more information on the Aetna HealthFund family of products.