HSA, FSA AND HRA: WHO PAYS, AND WHEN THE CASH GOES OUT.
An HSA is an account that belongs to the employee and is paired with a high deductible health plan. The employee, the employer or both can fund it. A health FSA is funded by the employee's pay reduction, and the employer can add money if the plan allows it. An HRA is funded by the employer only, and the employer pays out as claims are submitted. For the owner, the cost is the contributions, the administration fees and, with an HRA, the reimbursements. An HSA contribution is usually paid each pay period or in a lump sum, which makes it easy to put in the labor burden. An HRA is paid as claims come in, which makes it harder to predict.
This page covers the money side only: who funds each account, what the employer pays, when the cash goes out, and how it turns into a cost per labor hour. It does not say which plan or account to choose. A licensed broker or benefits advisor places the plans.
WHAT IT MEANS.
An HSA, an FSA and an HRA are three tax-favored accounts that pay medical costs, and they differ in who puts the money in, who owns the balance, and when the employer's cash leaves the bank.
Plan rules, tax rules and state law differ, and they change. This page describes the general way the accounts work so the owner can follow the cash. Before putting any of these accounts in place, check the plan document with the plan advisor and the tax treatment with a tax professional.
Dollar limits on these accounts change every year. The IRS publishes them for each year, and a figure printed here is labeled with its year. For the year you are in, use the current IRS publication or ask your advisor.
HOW EACH ACCOUNT PAYS OUT.
HSA: the employee owns it, and either side can fund it
A health savings account is opened by an employee who is covered by a qualifying high deductible health plan. The employee can put in money, the employer can put in money, or both can. The balance belongs to the employee, so the employer's contribution is a cost that is paid and finished, with nothing to get back. For 2026 the IRS limit on total contributions to an HSA is $4,400 for self-only coverage and $8,750 for family coverage, and employer contributions count toward that limit. If the employer contributes outside a cafeteria plan, the IRS comparability rule says the employer generally has to contribute the same dollar amount, or the same percentage of the deductible, for comparable employees, and an excise tax applies to amounts that are not comparable. Contributions made through a cafeteria plan follow different rules, so this is a question for the plan advisor.
FSA: funded by the employee's pay, with the claims risk on the employer
A health flexible spending account is set up through a cafeteria plan. The employee chooses a yearly amount, and it comes out of each paycheck before tax. For plan years beginning in 2026 the IRS limit on that employee election is $3,400. The employer can add money if the plan allows, but many employers add nothing. The part that surprises owners is timing. A health FSA generally has to make the full yearly election available early in the plan year, so a claim can be paid before the employee's paycheck deductions have covered it. If the employee leaves before the deductions catch up, the employer can be out the difference. Plan rules differ, so ask the administrator how this is handled in the plan document.
HRA: employer money only, paid out as claims come in
A health reimbursement arrangement is funded by the employer alone. The IRS rule is that employees cannot fund it through a pay reduction. The employer sets an amount, and when an employee submits a qualifying medical expense the employer reimburses it up to that amount. The employer's cost is the reimbursements paid plus the administration fee. The maximum cost is the amount promised to every employee, and the final cost depends on how many claims come in. Unused amounts can generally roll forward under the plan terms, which means the promise can outlast the year.
The accounts do not always combine
The IRS treats participation in a general purpose health FSA or HRA as a disqualifier for HSA contributions, with exceptions for limited purpose and post-deductible forms of those accounts. That is why the owner usually hears about the three accounts as a set of choices in the same renewal conversation. The cost question is separate from the eligibility question, and the plan advisor answers the eligibility question.
Administration fees are a real line item
FSAs and HRAs usually come with a third party administrator who processes claims, manages the debit card and does the compliance testing, and charges a fee. Some HSA providers charge a monthly account fee as well. Fees differ by provider and plan size, and the proposal shows them. The owner asks who pays each fee, the employer or the employee, because the answer changes the cost per employee.
Larger employers and prevailing wage work have extra rules
An employer with 50 or more full-time employees, counting full-time equivalents, is treated under a separate set of rules for several of these benefits. On Davis-Bacon and similar projects, the rules for crediting health contributions toward the required fringe rate differ from the rules for the tax exclusion, and a contractor's own administrative costs are not creditable. The prevailing wage fringe page covers that side.
WHAT IT LOOKS LIKE IN DOLLARS.
Say the employer puts $1,500 per employee per year into each HSA. For 20 field employees that is $30,000 a year, or $2,500 a month. Divide $1,500 by 2,080 paid hours and the add is $0.72 per paid hour. If the burden is calculated on 1,800 hours that are billed or worked on jobs, the same $1,500 is $0.83 per hour. Employer HSA contributions that the employee can exclude from income are generally exempt from federal income tax withholding and from social security and Medicare tax, so there is usually no payroll tax added on top of the $1,500. Check this with your payroll provider and tax professional.
Say there are 10 covered employees. A lower deductible plan costs the employer $650 per employee per month in premium, which is $6,500 a month. A higher deductible plan costs the employer $520 per employee per month in premium, and the employer puts $100 per employee per month into each HSA. That is $5,200 plus $1,000, or $6,200 a month. The difference in the employer's monthly cash is $300, or $3,600 a year. These inputs are invented. They do not include what employees pay out of pocket when they use care, and they do not say which design is right. The point is only that a premium and an account contribution are two payroll lines, and they have to be added together to compare.
Say the employer promises each of 10 employees an HRA amount of $2,000. The most the employer can owe is $20,000. If employees submit $7,000 of qualifying claims in the year, the employer pays $7,000 plus the administration fee. If they submit $20,000, the employer pays $20,000 plus the fee. The cash goes out when the claims are reimbursed, which can be in a single month. A budget for an HRA is built on the maximum, with the likely amount shown next to it.
WHAT WE CHANGE.
SPM adds a fixed employer contribution, such as an HSA deposit, to the burden as a dollar amount per hour using the same hours basis as the rest of the burden. For an HRA, SPM adds the budgeted reimbursement plus the fee, and updates the rate when actual claims are known. The burden page shows the calculation.
SPM lists the premium, the account contribution, the administration fee and the reimbursements as separate lines in the cash forecast. A fixed contribution goes in each pay period. An HRA reimbursement goes in the month the claims are expected. That way the month with a large reimbursement is not a surprise.
When the broker brings two options, SPM puts premiums, contributions and fees for both on one page, with the monthly and yearly difference. SPM does not pick the plan. The owner and the broker decide, and the page shows what each choice does to the monthly cash.
SPM matches each administrator or custodian statement to the amounts paid. HSA deposits, FSA claims paid ahead of employee contributions and HRA reimbursements each get a place in the chart of accounts, so a year-end review shows what the program cost and where the cash went.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
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