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HSA vs. HRA: Which is more popular?

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In the popularity contest between health savings accounts and health reimbursement accounts, there’s a clear winner.

Small- to mid-size employers and employees are shifting their attention from HRAs to HSAs, according to a new survey from United Benefit Advisors.

In 2013, the number of employers offering HSAs increased from 14.7 percent to 15.1 percent, and employee participation in these plans rose from 7.1 percent to 8.8 percent. Meanwhile, 8.6 percent of employers offered HRAs in 2013, and employee participation in these plans dropped from 8.8 percent in 2012 to 8.6 percent in 2013.

It’s the latest measure of the growth of HSAs. Last week, America’s Health Insurance Plans said that health plans that include health savings accounts continue to rise in popularity — experiencing double-digit growth over last year.

UBA cited HSAs’ ability to drive consumer behavior and cost containment — as well as remaining in compliance with the maximum allowable out of pocket costs under PPACA — as reasons for its growth.

It helps that PPACA legislation was amended to allow metal tier plans to have higher deductibles, UBA said.

“I think carriers will be more creative with their plan designs next year, and we may see a comeback of higher deductible and HSA qualified plans,” said Elizabeth Kay, compliance and retention analyst for AEIS, a UBA partner firm.

The UBA survey found that, on average, funding levels for plans with HSAs have remained constant for individuals at approximately $574 for both 2012 and 2013, while average funding for families increased from $928 in 2012 to $958 in 2013. Funding levels of plans with HRAs increased significantly for individuals from $1,605 in 2012 to $1,766 in 2013, and for families from $3,075 in 2012 to $3,506 in 2013.

“Under PPACA it seems unlikely that small employers will be able to use HRA contributions to get deductibles to the $2,000/$4,000 level,” says Rob Calise, UBA board chairman. “As a result, there will likely be a dramatic shift in funding strategies in the near future.”