Difference Between HRA and HSA

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.

1. How does a HRA health plan work?
2. Is HRA use it or lose it?
3. Is an HRA plan good?
4. Can I have an HRA and HSA at the same time?
5. Can I withdraw money from my HRA account?
6. How can I spend my HRA?
7. Do I need to submit proof for HRA?
8. Can I cash out my HSA?
9. What is the 2020 HRA limit?

How does a HRA health plan work?

An HRA, or health reimbursement arrangement, is a kind of health spending account provided and owned by an employer. The money in it pays for qualified expenses, like medical, pharmacy, dental and vision, as determined by the employer.

Is HRA use it or lose it?

In general, HRAs have no “use-it-or-lose it” policy. The employer can specify at the beginning of the year whether funds remaining in a participant's HRA are either forfeited to the employer at the end of the Contract Year or whether funds can roll over and remain in the account from year to year.

Is an HRA plan good?

An HRA is not health insurance. Instead, employers offer employees a monthly allowance of tax-free money. ... An HRA plan is an excellent way to provide health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance.

Can I have an HRA and HSA at the same time?

Yes. If the HRA meets the requirements for an HSA-qualified medical plan and you satisfy all other eligibility requirements, you can open and fund to an HSA and receive employer reimbursement funds tax-free through an HRA.

Can I withdraw money from my HRA account?

An HRA is not an account. Employees cannot withdraw funds in advance and then use them to pay medical expenses. Instead, they must incur the expense first, then have it reimbursed. Reimbursement at the time of service is possible if the employer provides an HRA debit card.

How can I spend my HRA?

HRA - You can use your HRA to pay for eligible medical, dental, or vision expenses for yourself or your dependents enrolled in the HRA. Your employer determines which health care expenses are eligible under your HRA. Refer to your plan documents for more details.

Do I need to submit proof for HRA?

Yes, the rent receipt is a mandatory document to claim HRA. If an employee receives HRA in excess of Rs. 3000/month, it is necessary to present rent receipts to the employer for claiming HRA.

Can I cash out my HSA?

Can I withdraw the funds from my HSA at any time? Yes, you can withdraw funds from your HSA at any time. But please keep in mind that if you use your HSA funds for any reason other than to pay for a qualified medical expense, those funds will be taxed as ordinary income, and the IRS will impose a 20% penalty.

What is the 2020 HRA limit?

Contributions per employee are limited to $1,800 in 2020, regardless of family status. EBHRA money can be used only to reimburse excepted benefits.