Industry News

New Acronyms For You To Know!

Just when you thought that the insurance industry couldn’t come up with more acronyms and make it more confusing — guess again!

However, these acronyms can actually help you save money – a concept that should make the learning of these just a little more fun.

HRA – (Health Reimbursement Arrangement) –An HRA is a federally approved program which makes provisions for employers to set up accounts for their employees to allow reimbursements for their eligible out-of-pocket expenses. The idea is that the employer selects a higher deductible plan that saves them a lot of money, then use the savings from the higher deductible plan to help fund an employee HRA. Employees like the fact that the used premiums can be rolled over from year to year. The HRA is a business deduction for the employer and at the same time give the employee the flexibility to choose how to manage their health care dollars. HRA were recently enacted by Congress to help both the employer and employee deal with the increasing cost of medical insurance.

FSA – (Flexible Spending Account) – This is the plan that is most associated with the phrase ‘Use it or lose it.” Employees fund with pre-tax dollars money to pay for medical and medical related expenses. President Bush has proposed that employees be encouraged to use FSAs by allowing them to roll over leftover contributions up to $500 or deposit unused funds in a 401k plan or health expenses at a later date. Recently, Congress passed a law allowing special debit cards to be used for FSA-eligible expenditures. The employer benefits by not having to pay FICA, FICA Med, SDI, and Workers Comp on the wages employees put into the FSA. That translates into about 10% savings to the employer for every dollar the employee contributes, which can more than pay for the cost of the FSA.

We have made special arrangements with administrators to help our clients obtain these plans for the lowest possible cost. If you’re interested in learning more, please let us know.

MSA – (Medical Savings Account) – This is now referred to as the Archer Medical Savings Account. Archer MSAs are similar to Individual Retirement Accounts (IRAs) and FSAs, but with several key differences. They’re personal savings accounts established with a financial institution to reimburse qualified medical expenses, including health plan deductibles and copayments, as well as some services not typically covered by health plans. Services covered under a MSA is the same as under FSA and HRA, which may include dental, vision, chiropractic, acupuncture, psychological – essentially expense performed by a licensed practitioner of the healing arts. A MSA requires a certain Medical plan to be written with it, so it not for everyone.