Offering a qualified high-deductible health plan (HDHP) paired with an HSA can be a powerful strategy to reduce spending and help employees prepare to manage their growing healthcare responsibilities, both now and into retirement. HSAs allow employees to set aside pre-tax dollars for eligible healthcare expenses, while reducing an employer’s FICA and federal unemployment tax liability. Unused funds carry over year to year and employees can invest what they do not spend, enabling them to build a nest egg for the future.

FSAs do not require participation in an High Deductible Health Plan (HDHP), so they are most frequently offered in conjunction with traditional health plans. An FSA allows employees to set aside tax-free dollars for eligible healthcare costs for the current plan year, although plans may have a grace period or a carryover amount for added flexibility. Employees have access to their full annual election amount on the first day of the plan year.

Healthcare FSA

• Covers eligible expenses like deductibles, co-pays, prescriptions, and OTC medications

Limited purpose FSA

• Can be combined with an HSA and used specifically for vision & dental expenses.

An HRA is a promise of employer dollars. The employer promises access to dollars for employees to use for out-of-pocket medical expenses, such as deductibles or coinsurance. Only the employer can put money into the HRA. HRAs are flexible and can be designed to suit the needs of the employer and the employees. 

A DCA lets employees use pre-tax dollars to pay for eligible expenses related to the care of a child, disabled spouse, elderly parent, or other tax dependent. Allowing the employee to work, or if married, for a spouse to work, look for work, or attend school full time.

A commuter account is an employer-sponsored benefit program that allows employees to set aside pre-tax funds in separate accounts to pay for qualified mass transit and parking expenses associated with their commute to work.