The Affordable Care Act (known as ACA or health reform) was signed into law in 2010 and impacts many areas of health care and health insurance, including medical reimbursement programs such as HRAs, HSAs and FSAs. Here's an overview of how health reform impacts HRA, HSA and FSA programs.

The IRS recently announced the health savings account rules and requirements for 2014. The HSA contribution limits and out-of-pocket maximums have been increased. 

An HSA (or Health Savings Account) is a tax-advantaged savings account that belongs to you and is paired with a qualified high-deductible health plan (HDHP). You can make HSA contributions for the 2013 tax year until April 15, 2014. Maxing out the 2013 HSA limit set by the IRS will reduce the amount the employee pays in federal income tax.

Health Savings Accounts (or HSAs) were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses. Generally, an adult who is covered by a high-deductible health plan (and has no other first-dollar coverage) may establish a Health Savings Account.

A Health Savings Account, or HSA, is a financial account established by an individual or family to pay for HSA-qualified medical expenses. Individuals with an HSA receive a 100% income tax deduction on contributions they make annually.

Due to rising health insurance costs, the majority of U.S. businesses are increasing the employees' share of health care.  This "cost-shifting" from employers to employees comes in many different forms, including:

The History of Health Savings Accounts, or HSAs, goes back to the 1980s and 1990s when Congress began discussing Medical Savings Accounts (MSAs)

In the 1980s and 1990s, Congress began discussing Medical Savings Accounts (MSAs) where any consumer could (1) pay for all medical expenses with tax-deductible dollars and (2) spend or save unlimited tax-advantaged amounts for current or future medical expenses.

Comparison charts provide an excellent way of summarizing complex information.  As a follow-up to yesterday's HRA case studies, check out this HRA, HSA, FSA, PRA comparison chart. It's a good summary of the key differences between the four primary types of health care reimbursement accounts and arrangements.

For Most Businesses, HRAs are Superior to HSAs

Which is better: A Health Reimbursement Arrangement (HRA) or a Health Savings Account
(HSA)? The answer depends on what you are trying to accomplish and whether you are an employer or an employee.

HRA vs HSA - What is a Health Reimbursement Arrangement (HRA)?

A Health Reimbursement Arrangement, or HRA, is notional account that employers use to reimburse employees’ healthcare expenses. Funds do not accumulate in a separate account; rather, employers pay only after their employees incur expenses.

The 2012 Health Savings Account (HSA) guidelines have changed from 2011.

High Deductible Health Plan (HSA Qualified)

In 2012, a “high deductible health plan” will still be defined as a health plan with an annual deductible at least $1,200 for self-only coverage or $2,400 for family coverage.

The annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,050 for self-only coverage or $12,100 for family coverage.

2012 Annual HSA Contribution Limits