Get access to the exclusive HR Resources you need to succeed in 2018!
SHRM board member David Windley discusses how unconscious bias can derail workplace diversity efforts.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Which Is Which-HRAs and HSAs
Health savings accounts (HSAs) represent one of two principal approaches to high-deductible coverage; the other is the health reimbursement account (HRA). HRAs are not subject to the federal rule that requires prescription drugs in HSA plans to be subject to a high deductible rather than handled under a fix-dollar co-pay arrangement.
Together, HSAs and HRAs cover only about 3 percent of insured Americans.
Although the Internal Revenue Service has established firm rules on HSAs, including the prescription drug provision, employers still have some flexibility in designing prescription drug benefits.
"One approach is for companies to make generous monthly contributions to help employees cover the cost of drugs before they reach the deductible," says Bill Sharon, a senior vice president at Aon Consulting who is based in Tampa, Fla.
The out-of-pocket maximums under an HSA can be as high as $5,250 for individuals and $10,500 for families. But anyone-employee, employer or anybody else-can put funds into an employee's HSA. The one-year maximum total contributions are $2,700 for an individual's HSA and $5,450 for a plan covering a family.
Even if the employer does not fund HSAs-which could help employees pay for drugs-employees may not have to pay full price for their prescription medicine. They can use drug cards typically issued by their employers' pharmacy benefits managers to get medications at discounts of up to 40 percent, Sharon says.
Once an HSA's high deductible is reached, most HSAs cover either 80 percent or 100 percent of the cost of prescription drugs. If a plan provides for less than the full cost of drugs, coverage becomes 100 percent when the out-of-pocket maximums are reached.
In some respects, HSAs are more appealing to employers as well as employees. HRAs, which became available a few years earlier than HSAs, differ from HSAs in several major respects. For example:
Joshua Kendall is a freelance writer in Boston who specializes in health care and health policy issues.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies