There are three common Consumer Directed Accounts that allow you to use pre-tax dollars or reimburse you for qualified, health-related expenses.
Explore the chart below to understand the important differences between each account type.
Consumer Directed Accounts Comparison Chart:
Tax-exempt account that allows you to set aside pre-taxed income for medical expenses
A COBRA-eligible account that reimburses you for qualified medical expenses
An account that allows you to set aside a pre-determined amount of money for out-of-pocket expenses that are not covered by your plan.
Money can be deposited by the employee or the employer
Money can be deposited only by the employer
Money is deducted from your income before it’s taxed
Must be set up in conjunction with a High Deductible Health Plan
Must be set up in conjunction with a High Deductible Health Plan
HDHP not required
You can take funds with you when employment ends
You can NOT take funds with you when employment ends
You can NOT take funds with you when employment ends
Can roll over from year to year
May roll over funds from year to year at employer’s discretion
May reduce employer’s obligation for Medicare and FICA taxes to significant savings
Consumer Directed Accounts Comparison:
HSA
Tax-exempt account that allows you to set aside pre-taxed income for medical expenses
Money can be deposited by the employee or the employer
Must be set up in conjunction with a High Deductible Health Plan
You can take funds with you when employment ends
You can take funds with you when employment ends
HRA
A COBRA-eligible account that reimburses you for qualified medical expenses
Money can be deposited only by the employer
Must be set up in conjunction with a High Deductible Health Plan
You can NOT take funds with you when employment ends
May roll over funds from year to year at employer’s discretion
FSA
An account that allows you to set aside a pre-determined amount of money for out-of-pocket expenses that are not covered by your plan.
Money is deducted from your income before it’s taxed
HDHP not required
You can NOT take funds with you when employment ends
May reduce employer’s obligation for Medicare and FICA taxes to significant savings
What's Covered
FAQs
Q: How much should I Contribute to my HSA?
A: Figure out how much you should contribute to your HSA account by using the HSA Contribution Worksheet in the Resources section below.
Q: How much should I Contribute to my FSA?
A: J.P. Farley has designed a Flexible Spending Account Worksheet to help you determine how much money you should contribute to your account for the plan year. It is also located in the Resources section below.
Q: Can I have an HSA, HRA, and an FSA?
A: If you participate in a health savings account and wish to also participate in a flexible spending account or health reimbursement account, you must make sure your employer is offering a “limited purpose” arrangement plan.
Resources
FAQs, worksheets, and forms to help you get the most out of your HSA, HRA, or FSA: