Differences between HSAs, HRAs, and FSAs

There are many differences between Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs) — and knowing these differences may help you know how to use these accounts to your advantage. 

Compare HSAs, HRAs and FSAs

Compare the details about each type of account to learn which one may be right for you.

Differences between HSAs, HRAs, and FSAs
  Health Savings Accounts (HSA) Health Reimbursement Accounts (HRA) Flexible Spending Accounts (FSA)
How do I get it? You must have a high deductible health plan that meets a deductible amount set by the IRS to be eligible. If your employer offers this type of health plan, you will get an HRA when you sign up for the plan. You establish an FSA through your employer. It doesn’t have to be tied to a health plan.
Who funds it? 

You do. You contribute pre-tax money via payroll deductions. There's a set maximum for self and a different maximum for families. These amounts generally change every year. View current contribution limits.

Your employer, family and others can put money into it if they choose. Any unused funds continue to roll over year to year. Like any personal savings account, there’s no limit to how much you can save over time.

An HRA is funded entirely by your employer. You can’t put your own money into it. You contribute via payroll deductions. Your employer can also contribute.
How can I spend the money? It can only be used for qualified medical expenses. This does not include paying for premiums. You can use your HRA for premiums and medical expenses. Your employer keeps the funds. Even if you stay at your job, you could lose your FSA money if you don’t use it within one benefits year — so it’s a good idea to not park more money in your account than you can usually spend.
What happens if I leave my job? If you leave your job, you can take your HSA with you. (Once you’ve established an HSA, it’s yours forever.) You can’t take an HRA with you when you go (it belongs to your employer.) You can only use the money for out-of-pocket expenditures or qualified medical expenses — health insurance premiums don’t qualify. The amount you can spend is capped.
What are the tax advantages? Tax benefits include tax deductible contributions and account holders can build up their HSA by earning tax-free interest as well as tax-free returns from investing their funds. An HRA is tax-free for both you and your employer. You don’t pay federal, state or Social Security taxes on this money.

What's the difference between HSA, HRA, and FSA?

Can I use my HSA, HRA and FSA together?

Using your HSA, HRA or FSA in combination may or may not be possible — it depends on your circumstances. There’s no easy or “right” answer. It gets tricky due to the possibility of double-dipping. Let's go over how it works.

Using an FSA + HRA together

You can use an FSA and HRA together. If you have an FSA, expenses typically come from that account first. Funds from the HRA are then used to cover other medical expenses.

Using an FSA + HSA together

It’s uncommon to have an FSA and HSA at the same time, but not impossible. One exception to this rule is pairing an HSA with a limited-purpose FSA (also called an HSA-compatible FSA, or post-deductible FSA). In this case, you can use your limited-purpose FSA only for certain expenses, like dental or vision care, until you reach your health plan’s deductible. By tapping into your limited-purpose FSA first, you can save more of your HSA dollars for future expenses.

Using an HRA + HSA together

You can use an HRA and an HSA at the same time if you are enrolled in a high deductible health plan (HDHP), but the IRS has specific rules as to how they work together. For example, you can’t use HSA funds to cover medical expenses that were reimbursed by your employer in an HRA. You can also use them together if you opt out of your HRA reimbursement of qualified medical expenses (you can keep reimbursement for premiums). Review your health plan details to learn more.