Our company recently went with HSA's and the ABC Insurance Trust was very helpful with setting that up.

There are very few brokers in Pennsylvania willing to speak about HSA's because they are so new and ABC was able to help us.

David K. Leinbach
Kaiser Construction Co., Inc.

Consumer-Driven Health Products are much more than a passing fad! They hold great promise for employers who want to gain control over escalating employee health plan costs.

Consumer-Driven Health Plans (CDHP) strive to educate employees and encourage them to become more involved in the health care decision-making process. Employees are much more likely to compare treatment plans, review the services available to them, and control costs because they know: 

Their health account dollars will roll over from year to year and can be saved for a rainy day; and they must meet a higher deductible before their health plan begins to cover expenses. The typical CDHP is a high deductible plan combined with either a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA)

Health Savings Account (HSA)

A HSA is a tax-exempt account created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse or dependents. 

Health Savings Accounts, the newest tax-favored medical savings accounts, are permanent, portable and available to everyone — individuals and employers — with qualified high deductible medical plans.

Health Reimbursement Arrangement (HRA)

A HRA is an employer funded account that reimburses employees for qualified medical care expenses, typically combined with a HDHP. An HRA can be used with any medical plan, but must be established and funded soley with employer dollars. At the employer's discretion, an HRA may allow employees to roll over unused funds from year to year, or allow terminated employees to spend their unused balances.

Flexible Spending Arrangement (FSA)

A FSA is a type of cafeteria plan authorized under Section 125 of the Internal Revenue Code. Separate accounts can be set up to cover each of the following types of expenses:

  1. Health insurance premiums (known as a "premium-only plan")
  2. Qualified medical expenses
  3. Dependent care expenses

HSA's and HRA's are both Consumer-Driven Health Plan alternatives but they are different in many ways and offer unique opportunities for ABC members: 

  • HRA's are established with employer only dollars and they do not need to be pre-funded.
  • HSA's do not require employer involvement, they can be funded entirely by the employee or by a combination of employer and employee dollars.
  • HSA funds are held in an IRA-like account for the exclusive use of the participant, so they are fully portable. (When employees terminate, they take their unused HSA funds with them.)
  • An HSA must be set up in conjunction with a specific type of High Deductible Health Plan (HDHP). In 2012, the HDHP must have an annual deductible of at least $1,200, with an out-of-pocket limit not greater than $6,050. For family coverage, it must have an annual deductible of at least $2,400 and an out-of-pocket limit not greater than $12,100. Deductibles are not required for preventive care, and out-of-pocket maximums may be higher for out-of-network care.
  • An HRA may be used in conjunction with any type of Health Plan, but is generally linked to higher deductible plans.
  • Employer contributions to HRA's and HSA's are not subject to income, FICA, Medicare, or FUTA taxes.
  • HSA contributions may be made by employees on a pre-tax basis through a Section 125 Plan, or may be made directly by eligible individuals and deducted from gross income. Earnings on amounts held in a HSA accrue tax-free.

The ABC Insurance Trust can help you set up a CDHP -- put us to work for you today!