Understanding the Difference: HRA vs. HSA

Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) are two types of accounts that offer tax advantages for healthcare expenses, but they have some key differences.

An HRA is funded solely by the employer, while an HSA can be funded by both the employer and the employee. HSAs are portable and belong to the individual, meaning they can be taken from job to job, whereas HRAs are usually tied to the employer.

With an HRA, funds can only be used for qualified medical expenses, while HSA funds can also be used for future healthcare needs or saved for retirement. Additionally, HRA funds do not roll over from year to year, but HSA funds can be carried over indefinitely.

Both accounts can offer great benefits in terms of tax savings and flexibility for healthcare expenses, so it's important to understand their differences to choose the right option for your needs.

When considering healthcare expenses, many individuals find themselves faced with the choice between a Health Reimbursement Arrangement (HRA) and a Health Savings Account (HSA). These accounts not only provide tax benefits but also vary greatly in their structure and usage.