Can You Roll Over an HRA to an HSA? Understanding the Transfer of Benefits

Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs) are both popular tools for managing healthcare expenses and saving for the future. Many individuals often wonder if they can roll over funds from an HRA to an HSA. The short answer is that it depends on the specifics of your situation.

HRAs are employer-funded accounts that can be used for qualified medical expenses. Unlike HSAs, HRAs are owned and funded by the employer, not the employee. On the other hand, HSAs are owned by the individual, providing more flexibility and control over the funds.

Here are some key points to consider when looking at rolling over an HRA to an HSA:

• HRAs and HSAs have different eligibility requirements and contribution limits. Make sure you meet the criteria for opening an HSA before attempting a rollover.
• Employers have the option to offer a rollover from an HRA to an HSA, but it is not mandatory. Check with your employer to see if this option is available.
• If your employer does offer a rollover, you will need to follow specific guidelines and procedures to initiate the transfer of funds.
• Once the funds are transferred to your HSA, they will be subject to HSA rules and regulations, including contribution limits and qualified expenses.

It's essential to consult with your employer's benefits administrator or a financial advisor to understand the implications of rolling over an HRA to an HSA. Each situation is unique, and the process can vary depending on your employer's policies and the terms of your HRA.

When considering a rollover from an HRA to an HSA, it's important to understand that HRAs typically operate under different rules compared to HSAs, which are tax-advantaged savings accounts. Therefore, if you have accumulated funds in your HRA, it may be worth exploring the potential to roll those funds into an HSA for greater personal control and flexibility over your healthcare spending.