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HRA / HSA / FSA Comparison Chart

INTERNAL REVENUE CODE
Plan Design or Compliance Issues Health FSA HRA HSA
Internal Revenue Code Internal Revenue Code Internal Revenue Code Internal Revenue Code
Pre-tax salary funding Permitted. Not permitted for HRA, but permitted for HDHP offered with HRA. Permitted for both HSA and HDHP. Additionally, the HSA may also be funded with after tax dollars, as well.
Carryover of unused amounts Not permitted. Permitted but not required. Permitted. Fully vested immediately.
Medical expenses that are eligible for reimbursement
  • IRS Code Section 213(d) expenses incurred during the coverage period.
  • No insurance premiums.
  • No long-term care services.
  • IRS Code Section 213(d) expenses incurred during the coverage period.
  • Includes insurance premium.
  • Includes long-term care insurance.
  • Cannot reimburse LTC premiums if HRA is in a FSA.
  • IRS Code Section 213(d) expenses incurred during the coverage period which have not been reimbursed.
  • No insurance premiums other than for COBRA or qualified LTC premiums, or insurance premiums while receiving umemployment or is over the age of 65.
Cash out of unused amounts Not permitted. Not permitted.
  • Permitted, but results in taxable income.
  • Subject to 10% excise tax.
  • Excise tax waived for participants over age 65, following death or in a divorce situation.
Medical expense incurred in the plan year of the contribution Applies. Does not apply. Does not apply if expense is incurred after the HSA is created.
Limitation on mid-year changes in the absense of life status change Applies. Does not apply since HRS is funded solely with employer funds.
  • Applies if funded through a cafeteria plan.
  • May apply if funded through pre-tax employee contributions.
  • Does not apply if funded by the employer or with employee after tax contributions.
Annual amount required to be available on the first day of coverage Applies. Does not apply. Does not apply.
Ability to spend down accumulated amounts after cessation of active participation Can only be used for claims incurred prior to termination unless COBRA is chosen. Depends upon the provisions of the Plan Document.
  • Depends upon terms of the Plan Document.
  • Funds can be distributed after termination subject to income tax.
  • Excise tax applies to funds spent on non-qualified medical expenses.
Third party claims adjudication Required. Required. Not statutorily required, but guidance says that an HSA must be treated the same as an MSA, which does not require third party adjudication.
Limitation on having other health insurance coverage (stacking)
  • None.
  • FSA must generally be the payor of last resort. However, Plan Document wording may change the order of benefit determination.
  • None.
  • FSA must generally be the payor of last resort. However, Plan Document wording may change the order of benefit determination.
  • Applies.
  • Participant not allowed to have an HSA if covered as a participant or dependent under any other health plan, including an HRA or medical FSA.
  • Stacking over HDHP allowed.
Non-discrimination requirements (Code 105(b)) Applies. Applies.
  • Does not apply to HSA.
  • Employer contributions must be "comparable". Must be the same amount or percentage for all similarly situated employees.
  • Section 125 discrimination rules apply.
Is a trust account required? Possibly by ERISA, but not by the IRS. Possibly by ERISA, except if reimbursements are made out of the general assets of the employer, but not by the IRS. Required.
Are account earnings taxable to participant? Generally, no if reimbursements are made directly out of the general assets of the employer for covered medical expenses and are not set aside in a seperate account. Generally, no if reimbursements are made directly out of the general assets of the employer for covered medical expenses and are not set aside in a seperate account.
  • Not if there is a qualified HSA Trust document.
  • Some cash out amounts may be taxed.
ERISA applicability for ERISA covered employers Applies. Applies. Does not apply if the following "safe harbor" conditions are met:
  • No contributions are made by the employer (pre-tax contributions are considered as employee contributions for DOL purposes).
  • Particpation is completely voluntary.
ERISA applicability for ERISA covered employers Applies. Applies.
  • The employer does not endorse the program, but can publicize the program and facilitate pre-tax contributions.
  • The employer receives no consideration other than "reasonable" compensation for services actually rendered.
Funding requirement Not required. Not required. Required to be in trust.
Plan asset issues Salary reduction amounts are considered as plan assets. Generally not plan asset if funded out of the employers general assets, but may be an asset if segregated. Considered as a plan asset once placed in a qualified trust.
Reporting requirements Required for 100+ Required for 100+ Applies if there are employer contributions.
ERISA SPD required? Required. Required. May apply if there are employer contributions.