HRA, HSA, and a Little History of Insurance

October 29, 2010

Money-Guy 10-29-2010

Today’s show is very timely considering how much health insurance has been in the news lately. It is a topic that affects every man, woman, and child in this country and is not always a straight-forward and easy thing to understand.

Because I have done extensive research on the topic in trying to select which plan I will use for my family, I wanted to share what I’ve learned. If you have been paying attention, then you have probably noticed that there has been a progression as to what type of health insurance plans are popular. In recent memory, we have transitioned from PPOs to HMOs. Individuals liked the idea of co-pays and being able to visit their doctor and then the insurance company would cover the rest.

Two new players have recently entered the scene, however. These new types of plans (Health Reimbursement Accounts and Health Savings Accounts) now make you a more active participant in your healthcare. These plans have become popular now because they charge a lower premium, but you have to cover more of the cost up front. This is great because it provides the incentive to not treat healthcare as an “all you can eat buffet”. With these plans you now have some skin in the game.

As you listen to the show, I describe the differences between these two types of plans:


  • Your employer primes the pump by allocating free money into your HRA account
  • You cover 100% until deductible is reached (you could very well save this amount with the lower premiums)
  • Once you’ve met the deductible, you’re responsible for co-insurance (i.e 85/15) until you reach your out-of-pocket limits
  • If one family member is the main use of medical, then HRA is better than HSA when considering the out-of-pocket limit
  • Under this type of plan, you may want to consider using a Flexible Spending Account to cover the donut hole, co-insurance, or uncovered items such as dental exams.
  • These plans usually offer some sort of incentive for good behavior (annual physical)


  • These plans have significantly lower premiums
  • You pay everything until deductible is reached (no co-pay or donut hole)
  • You get above the line tax deductions (direct decrease to income) for contributions made to this type of plan
  • Co-insurance is even more favorable than HRA (i.e 90/10)
  • This plans offer the potential to save for the future with Uncle Sam funding part of the bill through tax savings
  • You probably won’t use an FSA with this type of account

The most important thing you can do when selecting an insurance plan is to understand how the plan works and what your responsibilities are under the  plan. If you can understand this, it becomes much easier to select the plan that is most advantageous to your particular situation.

As you listen, I go very in depth to explain the inner workings of each of these plans and why one or the other may or may not be suitable for you. If you do elect to use the HSA plan, you can use this website to research the various custodians that offer HSA accounts.

To close out the show, I share a new venture that Cheryl Holland and I have created called Advisor Skills. If you are in the financial industry, or are thinking about one day entering into this industry, or are maybe just curious about this industry,  you should definitely check it out!

FILED UNDER: Featured, Podcasts
TAGGED WITH: insurance, risk

Most Recent Episodes

Dave Ramsey vs. The Money Guy: Which Strategy is The Best?

Dave Ramsey has an incredible legacy of helping folks get out of debt and take control of their financial lives. We agree on a lot of things, but there are a few points of contrast. In this episode, we’ll discuss differences between The Money Guy Show and Dave Ramsey...

Top 4 Financial Mistakes We Saw This Year! (2022)

We saw some wild financial mistakes this year during the bear market. From making extreme changes to portfolio allocation, chasing the hot dot, and using too much leverage, we’ll talk about some of the biggest financial mistakes we saw in 2022 in this episode.   In...

How Millionaires Build Wealth! (With Dave Ramsey)

Join us for a very special episode as we welcome personal finance radio host and influencer Dave Ramsey to The Money Guy Show! There’s so much misinformation out there about building wealth. We had the pleasure of having a great conversation about how millionaires...

Do These 4 Things with Your Finances BEFORE 2023!

There are unique financial opportunities available at the end of the year - especially this year with the market down. In this episode, we’ll talk about what you need to do with your money BEFORE 2023! In this episode, you'll learn: What you need to do with your money...

How to Win When the Financial World is Burning!

Lately it’s felt like the financial world is in chaos, with rising interest rates, a falling stock market, and high inflation. Let’s talk about how to focus on what you can control and how to minimize the time spent worrying about what you can’t control. In this...

Financial Advisors React to RIDICULOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

Loss Harvesting: Why Wealthy People Love It (And You Should Too!)

Tax-loss harvesting: what is it and should you be doing it? In this episode, we’ll cover everything you need to know about tax-loss harvesting, including whether it makes sense for you, how much it could save you in taxes, and how to eliminate the downside of loss...

The Market is Crashing! (Where Should You Put Your Money?)

The stock market has not had a great year so far. You might be asking yourself, “Since the market is crashing, where should I put my money now?” In this episode, we’ll discuss how to invest when the market is dropping and how to make the most of your money. In this...

Will Rising Interest Rates Tank the Economy?!

The Federal Reserve is raising interest rates to combat inflation, and many are concerned about how it will affect the economy. In this episode, we’ll discuss what rising interest rates means for your wallet and how to make the best of it. In this episode, you'll...

How to Be Wealthy By Age! (Can You Catch Up?)

How much does it take for you to meet your retirement goals by age, and what are some common traps your peers fall into? Learn more about how to be wealthy, mistakes to avoid, and exactly what a little extra saving can do for your retirement income. In this episode,...