Can We Have an HSA and HRA? Understanding the Option to Combine Health Savings Accounts and Health Reimbursement Arrangements

Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are two valuable tools that can help individuals save for medical expenses and reduce their taxable income. But can you have both an HSA and an HRA?

The short answer is: yes, it is possible to have both an HSA and an HRA, but there are certain restrictions and considerations to keep in mind. Here's what you need to know:

Understanding HSAs and HRAs:

• Health Savings Account (HSA): An HSA is a tax-advantaged savings account that allows individuals with high-deductible health plans to save money for qualified medical expenses.
• Health Reimbursement Arrangement (HRA): An HRA is an employer-funded account that reimburses employees for eligible medical expenses.

Can You Have Both?

Yes, you can have both an HSA and an HRA, but there are some restrictions:

• It depends on the type of HRA you have. An HRA that provides first-dollar coverage (pays for medical expenses before the deductible is met) may make you ineligible to contribute to an HSA.
• However, if you have an HRA that only covers certain expenses after you've met your deductible, you can still contribute to an HSA.
• Employers can offer both an HSA and an HRA, but they must structure the plans carefully to comply with IRS regulations.

Benefits of Having Both:

• Having both an HSA and an HRA can provide extra funds to cover medical expenses and give you more flexibility in how you use your healthcare dollars.
• You can use the HRA to cover certain expenses and save your HSA funds for future needs or investment for retirement.
• Combining both accounts can maximize your savings potential and give you greater control over your healthcare expenses.

In conclusion, while it is possible to have both an HSA and an HRA, it's essential to understand the rules and restrictions that apply. Consult with your employer and financial advisor to determine the best approach for your healthcare and financial goals.

Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are both essential financial tools for managing healthcare costs, helping you to save on taxes while preparing for medical expenses.