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Flexible Spending Account  (FSA)

A tax-free way for employees to save for qualified medical and dependent care expenses incurred during a single plan year.  Pre-tax contributions are taken via payroll deduction.  This reduces the federal, state, and FICA taxes that they have to pay.  Funds not used by the end of the plan year (or grace period if applicable) are returned to the employer according to the "Use It or Lose It" rule.  Contributions to an FSA can be made either by the employer, the employee, or both. Please contact our employee benefit department at 517-394-5225, then press 3, for information on FSAs.

Health Reimbursement Arrangement (HRA)

Also called a fixed contribution plan, personal care account, or health care account plan.  These are actually trust accounts set up by the employer in each eligible employee's name.  Typically, the employer provides a high-deductible medical plan and establishes an HRA that pays for the employee's eligible out-of-pocket medical expenses using employer funds.  These plans provide employees with an incentive to be conservative in health care spending because funds left at the end of the year can be rolled over from year-to-year and saved for future medical expenses.  Contributions to an HRA can be made by the employer only, and the employer sets the limit on any year-to-year roll over amount.  HRAs are employer owned accounts. Please contact our employee benefit department at 517-394-5225, then press 3, for information on HRAs.

Health Savings Account  (HSA)

A cross between a flexible spending account, an IRA, and a 401(k).  To have a federally qualified HSA, the participant must enroll and remain in a high-deductible health plan (HDHP) and not be covered under any other low-deductible (or traditional) health plan.  Pre-tax contributions can be made by the employee through a payroll deduction plan and placed in an investment account.  This reduces their federal, state, and FICA taxes and allows them to earn additional income on these funds.  The participant then has access to this account to pay for eligible medical expenses.  In addition, their account can grow, year-to-year, tax deferred.  Contributions to an HSA can be made either by the employer, the employee, or both.  An HSA is an employee owned account. Please contact our employee benefit department at 517-394-5225, then press 3, for information on HSAs.

**Tax references relate to federal income tax only.  Consult a financial or tax advisor for more information about state income tax laws.  Following are some relative links: http://www.irs.gov/pub/irs-tege/topicf.pdf http://www.treas.gov/offices/public-affairs/hsa/technical-guidance/ http://www.crbenefits.com/irsguidance.htm