Personal Funding Accounts

  • You may have purchased—or your employer may offer—a plan that includes a personal funding account (PFA). There are three different types of personal funding accounts, but the one thing that they all have in common is that they allow you to use pre-tax funds to pay for specific healthcare costs.

    Personal funding account comparison HSA HRA FSA
    You own the account check X X
    Your employer owns the account X check check
    You must have a high-deductible plan check X X
    Only your employer can put money in X check X
    You and your employer can put money in check X check
    You can invest the money in the account check X X
    Account must be reported for taxes check X X
    The money stays in your account until used check N/A* N/A*

    *Your employer decides whether or not your HRA or FSA funds will roll over annually.

    Health savings account (HSA)

    A high deductible health plan is a plan that covers preventive exams and screenings in full. It also gives you the flexibility of opening a health savings account. An HSA allows you to save money tax free and use it to pay for current and future IRS-approved healthcare expenses, such as your health plan's deductible, copays, and coinsurance. Unlike FSAs, there is no "use it or lose it" rule; the tax-free funds are yours to use on medical expenses as long as the account remains open.

    You can also save and invest your money and let it grow tax-free over time to use in the future.

    More about health savings accounts

    Flexible spending account (FSA)

    A flexible spending account is an account offered by your employer. There are 2 types of FSAs: healthcare FSAs and dependent care FSAs. They allow you to pay for qualified healthcare or dependent care expenses on a tax-free basis.

    You aren't taxed when you deposit funds, or when you withdraw money for qualified healthcare expenses.

    More about flexible spending accounts

    Health reimbursement arrangement (HRA)

    A health reimbursement arrangement is an account funded by your employer. You can use the funds in your HRA account to help pay for your healthcare costs on a tax-free basis. Only your employer can contribute to your HRA. You use these funds to pay for any qualified healthcare expense incurred by you or your dependents.

    There are different types of HRAs. Each type of HRA covers a different set of eligible healthcare expenses, which may include health plan deductibles, coinsurance, or copayments; vision or dental care; hospital charges; lab fees; prescriptions; and specific over-the-counter items.

    More about health reimbursement arrangements

    Note: This material is not intended to be tax or legal advice. The reader should consult with his or her own tax advisor to determine the tax implications of purchasing the products discussed herein. Advice, if any, included in this material was not intended or written by Premera to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.