Understanding the Difference Between Base Plans with HSA and MRA Options

Health Savings Accounts (HSAs) and Medical Reimbursement Arrangements (MRAs) are two popular options for managing healthcare expenses, each with its own set of benefits and features. When it comes to choosing between base plans with an HSA or MRA option, it's essential to understand the differences to make an informed decision.

Base Plans with HSA:

• HSAs are savings accounts specifically for healthcare expenses.
• Contributions to HSAs are tax-deductible.
• Unused funds in HSAs roll over from year to year.
• Withdrawals for qualified medical expenses are tax-free.
• HSA funds can be invested, allowing for potential growth over time.

Base Plans with MRA:

• MRAs are employer-funded reimbursement arrangements for medical expenses.
• Employees submit eligible expenses for reimbursement from the MRA.
• Unused MRA funds typically do not roll over at the end of the year.
• MRA funds are not portable and may be forfeited if an employee leaves the company.
• Reimbursements from MRAs are typically tax-free for employees.

Key Differences Between Base Plans with HSA and MRA Options:

• Ownership of Funds: HSA funds belong to the individual and are portable, while MRA funds are typically employer-owned and not portable.
• Tax Treatment: Contributions to HSAs are tax-deductible, and withdrawals for qualified medical expenses are tax-free. Reimbursements from MRAs are usually tax-free for employees.
• Roll-Over of Funds: HSA funds roll over from year to year, allowing for long-term savings accumulation, whereas MRA funds may not roll over and could be forfeited.
• Investment Opportunity: HSA funds can be invested, potentially increasing their value over time, while MRA funds do not offer investment options.

It's essential to weigh the pros and cons of each option based on your individual healthcare needs, financial goals, and employer offerings. Consulting with a financial advisor or benefits specialist can help you make the best decision for your situation.

Health Savings Accounts (HSAs) and Medical Reimbursement Arrangements (MRAs) are vital tools for managing healthcare finances, offering unique advantages that can greatly influence your financial wellbeing.