HRA vs HSA ?

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beyou
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HRA vs HSA ?

Post by beyou » Fri Nov 01, 2019 3:11 pm

Son got first FT job offer. Employer in MA gives choice of HRA or HSA.
The coverage slightly biases employees towards the HRA since deductibles/copays are a bit lower, but not significantly.

I have never been offered an HRA, only HSA. HSA seems superior as you keep the funds, HRA is a use it or lose it proposition each year,
similar to FSA (except employer funds are used when claimed, not your own payroll deductions). Young persons often change employers until they figure out what they want out of their career, and having an HSA would be an advantage. But paying lower premiums and deductibles would be an HRA advantage. Seems like a toss up unless you are sure you wouldn't be around very long.

OTOH HSA adds documentation complexity and another account to deal with.
HRA seems simpler and cheaper, but for a kid that rarely goes to the doctor and may or may not stay put,
seems HSA is the better choice.

Anyone have experience with the operational simplicity of HRA ? If your doctor files an eligible medical claim, will the insurance plan
automatically reimburse you for non-covered expenses (deductible etc) similar to many FSA administered by your health insurance provider ?
Of course covered expenses outside insurance (eye glasses etc) you would have to file a separate HRA claim (vs HSA just pay for the eyeglasses with your HSA debit card or pay from taxable and let the funds grow tax free, but no "claims" to file).

aerosurfer
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Re: HRA vs HSA ?

Post by aerosurfer » Fri Nov 01, 2019 3:41 pm

I use an HRA... that plan was far superior to the HDHP/HSA. The HRA is essentially an HSA that you don't own the funds outside of the plan, nor do you invest them. They do roll over and accumulate year to year in our plan if they aren't used. They automatically spend first on claims and leave the difference between the company contribution and the deductible much smaller. The Flex account makes up most of the difference.

There is no card for the HRA, it gets deducted through the insurance automatically.

When calculating the premiums + out of pocket max the company HRA plan makes the most sense. I'm a family of 4 with two under 5

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beyou
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Re: HRA vs HSA ?

Post by beyou » Fri Nov 01, 2019 7:03 pm

Third option for now. I have family insurance plan now, and another 24 yr old on it. Until he comes off it (2 years max) my younger son can stay on it too. No extra premium to keep him, and he benefits from our family deductible. As soon as elder son gets own insurance, O can switch to couple for us, and younger son will become eligible for these hra or hsa plan options (loss of coverage event).

I lean toward keeping both kids on family plan for now until I need to go on ACA (if I retire early). But this hra seems almost to make the plan free for my younger kid, so when the older kid is off my plan, no brainer to take free insurance.

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grabiner
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Re: HRA vs HSA ?

Post by grabiner » Fri Nov 01, 2019 10:04 pm

The HSA has two advantages over the HRA.

The more important advantage is that you can contribute your own money to the HSA, getting a tax deduction, and tax-free growth. (Even if you spend the money from the HSA on medical expenses, you still get the benefit of tax-free growth, as the money you spent from the HSA is money you didn't need to spend out of pocket, allowing you to contribute more to your IRA or 401(k).). The HRA is funded by your employer only up to a specific amount.

The other issue is that the HRA carries over from year to year only as long as you stay with the plan. If you leave your job, or even change plans within the same job, the unused HRA money is lost.

You have to weigh this difference against any difference in benefits, such as the deductible you may have to pay on a high-deductible plan in order to use the HSA.
Wiki David Grabiner

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