HSA vs. FSA vs. HRA
healthcare account comparison
Health Savings Accounts (HSAs), Healthcare Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) each let members use tax-advantaged dollars to pay for qualified medical expenses. But there are some important differences to keep in mind.
Which one will benefit me the most?
Consider an HSA if you want to…
Save a bunch of money on healthcare premiums
Rollover your money and keep it year after year
Maximize your tax savings
Invest for future healthcare expenses
Consider an FSA if you want to…
Get a smaller deductible
Prioritize near-term healthcare expenses
Manage significant prescription costs
Consider an HRA if you want to…
Get free money from your organization
No, really. Free money. Take it!
Side-by-side comparison
Health Savings Accounts (HSAs), Healthcare Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) each let members use tax-free dollars to pay for qualified medical expenses. But there are some important differences to keep in mind.
HSAHealth Savings Account |
FSAFlexible Spending Account |
HRAHealth Reimbursement Arrangement |
|
|---|---|---|---|
Account overview |
An HSA lets you use pre-tax money to pay for qualified medical expenses.1 HSAs require an HSA-qualified health plan in order to contribute. You can invest2 HSA dollars and grow tax-free earnings. Funds never expire—even if you change health plans, employers, or retire. |
A Healthcare FSA similarly empowers members to set-aside pre-tax money to pay for eligible medical expenses.3 The difference is that members do not keep their unused FSA money and funds may be forfeited back your employer. FSAs are generally paired with traditional health plans. |
An HRA is an employer-owned and -employer-funded account designed to help members bridge the gap on eligible healthcare expenses. HRAs are highly customizable and a great way for organizations to offset rising costs. Common eligible expenses include deductibles, coinsurance and copays.4 |
Health plan type |
HSA-qualified/High-deductible health plan |
Traditional health plan |
Either HSA-qualified or traditional health plan (integrated with an ACA-compliant health plan) |
Account ownership |
Member-owned (take your HSA with you) |
Employer-owned (no portability) |
Employer-owned (no portability) |
Who contributes? |
Member, employer or family2 |
Member, employer |
Employer only |
Tax-deductible contributions |
Yes – State, federal and FICA tax deductible for employers and members1 |
Yes – State, federal and FICA tax deductible for employers and members3 |
Yes – State, federal and FICA tax deductible for employers |
Adjust contribution amount? |
Anytime |
Only during annual enrollment (or with qualifying life event) |
Employer chooses at beginning of plan year |
Tax-free distribution |
Yes1 |
Yes |
Yes |
Debit card |
Yes, availability varies by plan |
Yes, availability varies by plan |
Yes, availability varies by plan |
Can members invest? |
Yes2 |
No |
No |
Tax-free earnings |
Yes |
No |
No |
Long-term savings |
Yes |
No |
No |
Do funds expire? |
Never |
Yes |
Yes |
Account carryover |
Yes—even if you change health plans, employers, or retire |
Varies by plan—some FSAs offer grace periods or limited carryover (up to $610 for 2023) |
No |
Contribution limits |
2024 View all HSA limits and guidelines |
2024 |
2024 |
Account compatibility |
LPFSA, DCFSA, HRA |
LPFSA, DCFSA, HRA |
FSA, HSA6, LPFSA, DCFSA |
How do I enroll? |
You can enroll in an HSA-qualified health plan and sign up for an HSA during your organization’s annual enrollment. If you have a high-deductible health plan on your own—not offered through an employer—you can sign up for an HSA right now. |
You can enroll in a health plan and sign up for an FSA during your organization’s annual enrollment period. |
You can enroll in a health plan and sign up for an HRA during your organization’s annual enrollment period. Some plans feature automatic enrollment. Consult your annual enrollment materials to learn how to enroll. |
Want more?
1HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.Return to content
2Investments are subject to risk, including the possible loss of the principal invested, and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc. Investing through the HealthEquity investment platform is subject to the terms and conditions of the Health Savings Account Custodial Agreement and any applicable investment supplement. Investing may not be suitable for everyone and before making any investments, review the fund’s prospectus.Return to content
3FSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize FSA funds as tax deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.Return to content
4In addition to restrictions imposed by law, your employer may limit what expenses are eligible for reimbursements. It is the members’ responsibility to ensure eligibility requirements as well as if they are eligible for the plan and expenses submitted. Return to content
5Some employers offer a base contribution and/or a contribution match. Please carefully review your annual enrollment materials to find out what’s available.Return to content
6HRA must be limited in scope to preserve HSA.Return to content
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