Chapter 30 - Consumer Driven Health Care - HSAs and FSAs Flashcards
Consumer Driven Health Care Plans
Flexible Savings Accounts (FSAs)
HSAs
This hopes that if the consumers share the costs and risks, they may be more likely to do research and consider factors when making decisions. Typically these are high deductible plans.
FSA - also called Flex Plans - must be employed by an employer who offers the plan. Employee contributes with tax deductible contributions. The funds are sent to a TPA (third party administrator) and they then reimburse to the member for approved medical expenses. IT DOES NOT EARN INTEREST, so the account is neither tax deductible or tax free. Any money left over at the end of the year, the health plan keeps it. Helps pay for copays, deductibles but not premiums. Can pay for dependent care, dental vision. Prescriptions and Medical supplies must be approved by a physician.
Consumer Driven Health Plan - combine a high deductible plan (HDHP) and a special tax advantaged pre funded savings account to be used to cover the deductibles, co-pays, and coinsurance of the high deductible. Employers can help contribute to the savings account.
Three IRS approved savings accounts
Medical Savings Account (MSA) - not really popular or used today. Replaced by HSA.
***Health Savings Account (HSA) - Any individual can set up an HSA. Pre taxed dollars, the annual balance is rolled over, the money accrues tax deferred and tax free for medical expenses, money can be used for any retirement purpose.
***Health Reimbursement Account (HRA) - employed by an employer who offers this. Employer makes the contributions, unused funds roll over from year to year. They cannot be taken when they leave their job, the money belongs to the employer. They employer is not required to even have a health plan.
