Types of Consumer-Directed Health Plans

Health Savings Accounts (HSAs)

An HSA is a true bank account into which you deposit money to be used for your future healthcare expenses. You can contribute your own money and deduct your contributions when you file your income taxes. Your family members can also contribute to your HSA. No matter who contributes, the money is yours. The money in your HSA earns interest just like a regular bank account.

Learn more about HSAs

You’ll need a qualifying “high-deductible health plan”—also known as an HDHP—to go with your HSA. HDHPs must have a deductible of $1,150 or more, but sometimes preventive care is exempt from that deductible. The great thing about HSAs is that you can use the money in your account to pay those deductible expenses. Any unused money in your HSA carries over from year to year just like a regular savings account, so you can save your money for future medical expenses.

HSAs are available from most banks, credit unions, and other financial institutions. They come with checkbooks and debit cards you can use to access your account funds. Your bank won’t check to make sure you only use HSA funds for eligible healthcare expenses. You’re responsible for keeping those receipts or other documentation to prove that you used your HSA appropriately in case of an IRS audit.

For more detail on HSA regulations, visit the U.S. Treasury’s HSA FAQ site.

HSA highlights:

  • Your or your family members can contribute to your HSA.
  • You own your account and all the money in it, no matter who contributed.
  • Money you deposit is tax deductible, earns tax-free interest, and can build from year to year.
  • You can withdraw funds to pay for medical expenses any time without taxes or penalties.
  • You can withdraw funds for nonmedical use subject to taxes and an IRS penalty.
  • HSAs are regulated by the federal government.
  • You must have a qualifying high-deductible health plan (HDHP) to contribute to your HSA. If your HDHP coverage ends, the HSA is still yours. You can spend those funds on qualifying healthcare expenses, but can’t make additional contributions without an HDHP.

Ready to find a consumer-directed health plan? Shop for a PacificSource individual plan that qualifies for combination with an HSA.  

Are you an employer? Learn more about group plans in our Employer section.

Health Reimbursement Arrangements (HRAs)

An HRA is an account-like arrangement set up by your employer to reimburse your qualifying medical expenses. Unlike the HSA, HRAs are really bookkeeping arrangements between you and your employer. Your employer makes available a certain amount for each employee’s HRA. Depending on the plan design, some HRAs come with debit cards you can use to access your funds. If not, you’ll provide documentation of your incurred expenses and be reimbursed by check or direct deposit.

Flexible Spending Accounts (FSAs)

A healthcare FSA is another type of reimbursement account offered by employers. It allows you to set aside money from your paycheck before taxes to pay for many of your family's healthcare costs during the year. You decide how much to set aside in your FSA. Because you’re spending pre-tax money on healthcare, you’ll pay fewer taxes and end up with a higher portion of your salary to spend on other things.