Consumer driven health plans save you money. They also require that you cover more of your routine medical expenses yourself. A smart way to save for these expenses is to take the money you would have spent on high premiums, and put it into a tax advantaged personal account that lets you save for medical costs. Here is a basic overview of these savings accounts:

Health Savings Account (HSA)

Health Savings Account, or HSA, is an IRS approved account that allows you to save some of your pre-tax payroll dollars to cover qualified medical expenses.

The account is used in combination with a high deductible health plan.

Both employees and employers can add to the account through regular payroll deductions.

Any unused balance at the end of the year may rollover to the next year, allowing you to build future funds. There are strict limits in order to qualify for putting money into an HSA, including how high your deductible is, your out-of-pocket liability and more. If you haven’t done so already, watch our video to learn more about the advantages of Health Savings Accounts, and how they give you more control over your healthcare.

For more detailed information about Health Savings Accounts, or HSAs, click here:

Health Reimbursement Arrangement (HRA)

The HRA is funded by your employer.

It pays for eligible health care expenses or it can be set up to pay for only those expenses that are eligible to be paid by the health plan.

Unused funds can be carried over to the next year to cover future health care expenses.

If funds are exhausted and you have not reached your deductible, you are responsible for covering the remaining healthcare expenses before the plan begins to pay.

If you changes jobs, the money may either stay with your employer or be made available to you after employment, depending on how your specific HRA is set up.

For more detailed information about Health Reimbursement Arrangements, or HRAs, click here:

Flexible Spending Account (FSA)

A Flexible Spending Account, or FSA, allows you to put some of your own pre-tax money into a savings account.

You use the account to cover dependent care expenses and services that are not paid by your health insurance.

The FSA can be funded by you or your employer.

If you don’t use the money by the end of the year, you will loose it.

For more detailed information about Flexible Spending Accounts, or FSAs, click here:

What this means for YOU:

Medical savings accounts offer you more ways to control your healthcare spending. They make your money go farther by allowing you to pay for medical expenses with pre-tax income. In other words, paying with post-tax dollars would cost you about 25% more.

For more information about medical savings accounts in general, visit the IRS’s website: IRS.gov