Attention Shoppers

Consumer-driven health plans are catching on quickly, but are they the answer to runaway medical costs?

Another key: the honor system. With HSAs, the employee has the responsibility for making sure the account’s funds are used for health-related costs. “It’s between the individual, the IRS, and God what the money is spent on,” says Domaszewicz. “Someone could go down to the corner store and buy a six pack of beer with funds from the account.”

Joseph McCafferty is editor of CFO Human Capital.

By All Accounts
A comparison of HSAs and HRAs.
Health savings
accounts
Health reimburshment
accounts
Eligibility Individuals Must be an employee
Ownership Employee-owned Employer-owned
Health-insurance requirements High-deductible plan None (employer’s discretion)
Who contributes Employee, employer, or both Employer only
Contribution limits Lesser of deductible ($1,000 single/$2000 family minimum) or IRS annual limit ($2,650/$5,250) None (employer’s discretion)
Funds rollover Allowed Allowed (employer can establish limits)
Portability Can take to new employer Usually no portable (employer’s discretion)
Nonqualified withdrawals Yes (taxable with 10% penalty) No
Claims substantiation Not required Required
Source: Mercer Human Resource Consulting

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