Well, that was certainly an interesting exercise: I’ve never done a 3-parter before. Any feedback is, of course, quite welcome.
Given the lengths of the previous posts, I’ll try to be brief in summation. First, it seems to me that the most important lesson to take away from this whole “debate” is that one needs to ask questions. Lots and lots of questions. Ultimately, whether you’re an employer or an employee (or self-employed, in the case of HSA), you’re going to have to live with the decisions, and its consequences, for a while.
Second, it’s critical that one avoid confusing the benefits and drawbacks of each program. The HSA certainly has an appeal to the employee, in that – by staying healthy, and exercising good judgment in health-care purchases – said employee stands to collect a nice windfall. On the other hand, an employee covered under an HRA can look forward to generally lower gross out-of-pocket expenses.
From the employer standpoint, both programs seem pretty equally matched. The HDHP that is the hallmark of the HSA can result in substantial premium savings. But the HRA obviates the need to set up funded, vested accounts for employees. And, in many ways, it’s a simpler plan to understand.
At its core, the biggest drawback to the HRA is that it seems to reward those employees who experience larger (or more frequent) claims. That is, the only way to access the extra funds that now reside in the employer’s pocket (i.e. the savings enjoyed from upping the deductible, etc) is to have a large claim, or more smaller ones. I’m not convinced that this is a positive.
My biggest beef with the HSA is the carriers really don’t price it effectively: there should be a much more dramatic difference between the High Deductible plans and the generic co-pay plans they’re designed to supplant.
Thanks for patiently slogging through all these posts, and a Special Thank You to Joe Kristan at Roth & Co for the nice links.