Health insurance
My son just got his first career job after graduating college. His employer offers two health insurance options: HSA or HRA, each with two deductible options. I am only familiar with PPOs and HMOs. How should he make a decision between an HSA or an HRA?
Terry Says
He definitely wants to create a Health Savings Account — money set aside to pan for non-covered expenses on a pre-tax basis. Money not used that year, rolls over for future expenses in healthcare. It’s sort of like an additional IRA but with money used only for uncovered health expenses. Since young people don’t use a lot of care tyically, it is a chance to make this money grow over the years. The Health Reimbursement Account (HRA) is money that MUST be spent before the year ends — thus the rush to buy contact lenses, glasses etc in December. Not such an appealing deal.
Whichever he chooses, this does not deal with the issue of an HMO vs PPO. The HMO will place limitations on care he can get, limiting doctors and hospitals and specialists. I’d always prefer the PPO, which typically gives a wider choice though at a higher premium. This only “matters” if he actually needs care.
