Why HRAs may work better for schools, cities and counties than HSAs

Schools, Cities and Counties across the country have found Health Reimbursement Arrangements (HRAs) to be a better fit than Health Savings Accounts (HSAs) for their employees. Here are four reasons why an HRA may work better for your organization too.

1. HRAs can be used for Medical Insurance premiums for Early Retirees.
   Most public sector organizations allow employees to retire prior to the age of 65. Only HRAs can be used for medical insurance premiums prior to age 65. HSAs cannot.
2. HRAs have no restrictive health plan requirements.
   An HSA must be used in conjunction with an IRS-defined High Deductible Health Plan (HDHP). With an HRA, there are no such requirements so you can use an HRA with any type of deductible.
3. With HRAs, all employees are eligible to participate.
   An HRA is available to both employees and retirees. HSAs are more restrictive – if an employee is covered by a spouse’s non-qualifying HDHP or non-modified Flexible Spending plan, they are not allowed to participate in an HSA.
4. HRAs have carry-over flexibility that allows employers to save more.
   The HRA provides you with the flexibility to design your plan so that unused funds at the end of the plan year can return to the employer, be shared between the employer and employee or stay in the employee’s account. The HSA does not allow unused funds to be shared.

For more information, download the whitepaper.