What Does HSA or HRA Mean? - An Overview of Health Savings Accounts and Health Reimbursement Arrangements

Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are both types of accounts that help individuals save money for medical expenses.

HSAs are tax-advantaged savings accounts that can be used to pay for qualified medical expenses. They are typically paired with high-deductible health insurance plans. Contributions to an HSA are tax-deductible, and funds in the account can be invested and grow tax-free. Withdrawals for medical expenses are also tax-free.

On the other hand, HRAs are employer-funded accounts that reimburse employees for out-of-pocket medical expenses. Employers set the terms of the HRA, including which expenses are eligible for reimbursement. Unlike HSAs, employees cannot contribute to an HRA.

Both HSAs and HRAs are valuable tools for managing healthcare costs and can provide significant tax benefits. Understanding the differences between the two can help individuals make informed decisions about their healthcare savings options.

Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are valuable financial tools designed to assist people in managing their healthcare costs effectively. Unlike traditional savings accounts, HSAs come with tax advantages that allow individuals to save money specifically for medical expenses.