more-arw search

Q&A Forum

Are there different accounting treatments for HSA's and HRA's?

Answers

Regina Potter
Title: Treasurer
Company: OGS
(Treasurer, OGS) |

Yes, HSA's and HRA's must be handled differently.

HRA’s are employer-funded plans, and as such, are considered general assets of the company. These plans reimburse employees for incurred medical expenses that are not covered by the standard insurance plan. All distributions made from the plan are considered tax deductible to the employer, and are generally tax free to the employee.

HSA's are employee-funded plans, though they can also be funded by employers or third parties. HSA’s are either trust or custodial accounts. Employee’s contributions to their account are tax deductible, as are any contributions employer’s make to an employee’s account. Any distributions from the plan for qualified expenses are tax free, but any other distributions are taxed as income with a 10% penalty (with a few exceptions). HAS’s tend to be more complicated, especially when funded by multiple sources.

2369 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.