| HRAs vs. MSAs vs. HSAs |
| What is the advantage to having a HSA or MSA |
With the alarming increases in health care costs, employers are looking to consumer-driven health plans, such as Health Reimbursement Arrangements (HRAs) and Medical Savings Accounts (MSAs), and the newly introduced Health Savings Accounts . Unfortunately, many consumers are confused about which approach is best.
One of the main differences between HRAs and a MSA or HSA is the incentive to be a value-conscious health care consumer. HRA funds do not accrue to the employee and therefore offer the employee little incentive to control spending. Indeed, the only way to gain value from the money is to spend it. Thus, it is possible that HRAs could increase health care spending rather than reduce it as consumer-driven plans are intended to do. |
| Question |
HRA |
MSA |
HSA |
| Does the employee own the money in the account? |
NO |
YES |
YES |
| Can the money be invested and the employee earn interest? |
NO |
YES |
YES |
| Can the employee use the funds for things other than medical expenses? |
NO |
YES |
YES |
| Can the employee take the money with them if they leave? |
NO |
YES |
YES |
| How can an employee access funds? |
Generally claims reimbursement. Employee provides receipt for services. |
Individual has direct access to funds with debit card, checks, or withdrawal form. |
Individual has direct access to funds with debit card, checks, or withdrawal form. |
| Who can contribute to the account? |
Employers |
Employers or Individuals, not both |
Employers and/or Individuals |
| Who is eligible? |
Employers can set up for current and former employees. Other than the self-employed, there are no restrictions on group size. |
Self-employed and small employers (ave. 50 or less) |
Individuals/employers of any size who have established a Qualified High Deductible Plan and are under 65. |
| Does the account need to be paired with high deductible insurance? |
No, but it is recommended. |
YES, plans must meet certain requirements determined by the IRS each year. |
YES, plans must meet certain requirements determined by the IRS each year. |
