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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Employer paid HSA vs. HRA

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: Can you as an employer have a HSA account for an employee as a benefit who the employee doesn’t have any other medical insurance. And the Company can get tax savings for the money? Please explain.

A: The Health Savings Account program authorized under IRC 223 requires a specific type of qualifying high deductible health insurance in order to qualify for either the employer or the employee to qualify for a tax deduction for the HSA account. This is the primary limitation of the HSA program as it exists today. So if the employee does not have qualifying insurance, then neither the employer nor the employee can take the deduction. In order to get an employer deduction for health benefits paid to an employee without regard to any insurance requirement, a better method is to use a Health Reimbursement Arrangement (HRA) as the tax-qualified health plan. HRAs are just as easy for an employer to set up and administer but allow for more flexibility in the design and coverage. Details are posted on the HRA page at .


More resources:

Freedom Benefits Small Business HRAs