HRA vs. HSA: Which Health Savings Option Should I Choose?

Choosing between a Health Reimbursement Account (HRA) and a Health Savings Account (HSA) can be a tough decision. Both options have their advantages and it ultimately depends on your individual needs and preferences. Let's break down the differences and benefits of each to help you make an informed decision.

Health Reimbursement Account (HRA)

An HRA is funded solely by your employer, and you can use the funds to pay for qualified medical expenses. Here are some key points to consider:

• Employer-funded account
• Tax-free contributions and withdrawals
• Unused funds may roll over

Health Savings Account (HSA)

An HSA is an individually-owned account where you can contribute pre-tax dollars for medical expenses. Here are some highlights of an HSA:

• Individually-owned account
• Triple tax benefits: tax-deductible contributions, tax-free growth, tax-free withdrawals for qualified medical expenses
• Portability - the account stays with you even if you change jobs

When deciding between an HRA and an HSA, consider factors such as your current health status, anticipated medical expenses, and your preference for account ownership and portability. Consult with a financial advisor or HR representative to understand the best option for your situation.

When choosing between a Health Reimbursement Account (HRA) and a Health Savings Account (HSA), it’s essential to assess both short-term and long-term health expenses, as well as how each option fits into your overall financial planning.