With healthcare becoming so expensive, employers and employees alike are trying to find ways to cut costs. One way of doing that is using an FSA or HRA account to fund healthcare expenses. Below explains the differences between an HRA and FSA account and how what you are able to spend the money on.
Flexible Spending Accountants
An FSA, flexible spending account/arrangement, is usually used to pay for medical expenses. This type of plan allows employees to set aside money, tax free, to cover medical expenses. It's beneficial because it will reduce your taxable income. Co-pays, deductibles, as well as DME (durable medical equipment) and some over the counter products.
Health Reimbursement Accountants
HRA, health reimbursement accounts, are healthcare accounts given to employees but funded by the employer. This type of account covers similar healthcare costs as an FSA. However, the employer is able to set the rules for the account. Usually the benefits do not roll over from year to year and they do not follow employees if they leave their current company.