Benefits 101 Redo

A PPO is a type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals and providers outside of the network for an additional cost.

HDHPs are health plans with high deductibles offset by low premiums. Most medical expenses (except for preventive care) will not be covered by the insurance company until the deductible is met. These plans help protect against high costs of severe medical issues. HDHPs are designed to be compatible with tax-advantaged health savings accounts that can be used to pay for qualified out-of-pocket medical expenses

This is an employee-owned savings account available to people enrolled in an HSA-compliant HDHP. Money may be contributed by both the employer and employee, and contributions are not taxed. The funds must be used for IRS-defined qualified medical expenses to avoid taxes and penalties, and funds roll over at the end of the year. Although there are yearly limits on how much can be placed in an HSA, there is no limit on how much the account can hold.

This arrangement allows employees to pay for many out-of-pocket qualified medical expenses with tax-free dollars. The account is employer-owned, and you do not have to be enrolled in an HDHP to be eligible for an FSA. You decide how much of your pre-tax wages you want taken out of your paycheck, while your employer can establish the types of expenses the health FSA’s funds can be used for. With this kind of account, unused funds may be forfeited by the year’s end.

With an HRA, employees are reimbursed tax-free for qualified medical expenses from their employer-funded group health plan. You do not have to be enrolled in an HDHP to be eligible. The employer determines the amount of money available in the account, the coverage period, and the types of expenses the funds can be used for. Unused amounts may be rolled over to the next year, if the employer permits.