Consumer-Directed Health Plans 101:

Health Savings Account (HSA)

Health Reimbursement Arrangement (HRA)

Flexible Spending Account (FSA)

Any individual covered by a qualified high-deductible health plan

Employer, individual, or both

Employee chooses annual election amount to be captured by payroll deduction; employer reimburses up to the employee's full election amount

Yes, at employer’s discretion; plan can also set carry-over limits

Yes

Yes

Account earns tax-free interest

Employers may deduct reimbursed employee medical expenses as a business expense

Employee contributions are tax-free

Employee contributions through a cafeteria plan are pre-tax; others are tax deductible

Employers with a cafeteria plan enjoy FICA tax savings

Qualified withdrawals are not taxed