Understanding HSA, FSA, and HRA Funds: What You Need to Know

Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) are all types of accounts that can help individuals cover healthcare expenses. Let's dive into what each of these funds entails:

Health Savings Account (HSA):

• An HSA is a tax-advantaged savings account that individuals can use to pay for qualified medical expenses.
• Contributions to an HSA are tax-deductible, and the funds in the account can grow tax-free.
• HSAs are only available to individuals who are enrolled in a high-deductible health plan (HDHP).

Flexible Spending Account (FSA):

• An FSA is another tax-advantaged account that can be used to pay for eligible medical expenses.
• Unlike HSAs, FSAs are offered through an employer-sponsored benefit plan.
• Contributions to an FSA are made through payroll deductions and are not taxable.

Health Reimbursement Arrangement (HRA):

• An HRA is an employer-funded benefit that reimburses employees for qualified medical expenses.
• Employers set the terms of the HRA, including the amount of funds available and which expenses are eligible for reimbursement.
• HRAs are not portable, meaning the funds belong to the employer if an employee leaves the company.

Understanding the differences between HSAs, FSAs, and HRAs can help individuals make informed decisions about how to manage their healthcare expenses. Each of these accounts has unique features and benefits that can help individuals save money on medical costs.

Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) play a crucial role in managing healthcare costs, offering individuals various options to save on out-of-pocket medical expenses. HSAs specifically cater to those enrolled in high-deductible health plans, providing substantial tax advantages.