| Feature |
HSA |
HRA |
| Who is eligible to participate? |
Employees who are covered by a high-deductible health
plan.
The IRS currently defines that as a health plan with a deductible of at
least $1,100 for individuals or $2,100 for families. The employee cannot
be covered under other health plans, cannot be enrolled in Medicare, and
cannot be claimed as a dependent on someone else's tax return. |
All employees.
There are special issues that affect participating principals of
employers organized as S corporations, partnerships, LLCs, and sole
proprietorships. |
| Who owns the account? |
The employee. |
The employer. |
| Who is eligible to make contributions? |
The employee, the employer or both. |
Only the employer. |
| What are the contribution limits? |
For 2007, eligible individuals may contribute a max of
$2850 for self-only coverage and $5650 for family coverage, regardless of
the deductible under the high-deductible health plan (HDHP). Catch-up
contributions are permitted for individuals 55 years old and older. |
The employer is allowed to determine contribution
limits. |
| What are considered covered expenses? |
All qualified medical expenses (as defined in Section
213(d) of the Internal Revenue Code), COBRA premiums, health plan
coverage while receiving unemployment compensation, Medicare premiums and
expenses (no Medigap premiums), and qualified long-term care
premiums. |
The employer is allowed to define covered
expenses.
Covered expenses can include all Internal Revenue Code Section 213(d)
qualified medical expenses; health insurance premiums for current
employees, retirees and COBRA beneficiaries; and qualified long-term care
premiums. |
| May unused balances be rolled over for future plan
years? |
Yes. The rollover is automatic. |
The employer is allowed to define whether all or part of
the balance may be rolled over. |
| Are there requirements as to which type of health plan
is offered? |
Yes.
Employees must be enrolled in a high-deductible health plan. The IRS
currently defines that as a health plan with a deductible of $1,100 or
higher. |
No.
However, most HRAs are offered in tandem with a high-deductible
plan. |
