Compare Plans

HSAs, FSAs, or HRAs? What is the Difference?

Healthcare accounts are not all created equal. We compare some of the main differences between HSAs, FSAs and HRAs.

Health Savings Account (HSA)Flexible Savings Account (FSA)Health Reimbursement Arrangement (HRA)
DefinitionAn HSA is a tax-advantaged savings account that is used in combination with a High Deductible Health Plan (HDHP). Consumers use the HSA funds to cover qualified medical expenses.An employer-established, tax-advantaged account funded by the employee to pay for qualified medical expenses with pre-tax dollars.An employer-funded plan that may be used to reimburse employees for medical expenses.
ContributorsIndividual/Employee, EmployerEmployee and/or EmployerEmployer Only
Annual Contribution Limit? (See for details)Yes.¹Yes.²Yes.³
Can unused funds carry over?Yes. The individual owns the account and any contributions made to it, regardless of the source or timing of the contribution.Limited to up to $500 carryover to the immediately following plan year OR a grace period⁴Determined by employers plan design
Are funds portable? (Job change, health plans, retirement)YesNoNo
Tax Benefit?Contributions are tax free, interest and investment gains are tax free and withdrawals are tax free when used for qualified expenses or post retirement.Employer/Payroll deposits and claim payments are tax free.Employer deposits and claim payments are tax free.
Interest Earning?Yes. And if account balance reaches the minimum balance requirement, the funds can be invested and those gains are also tax free.NoNo

¹ IRS-imposed HSA limits for 2014: The 2014 annual HSA contribution limit for individuals with self-only HDHP coverage is $3,300 (a $50 increase from 2013), and the limit for individuals with family HDHP coverage is $6,550 (a $100 increase from 2013). Annual catch-up contributions for those 55 and over: $1,000.

² In 2014, employee contributions for an FSA cannot exceed $2,500 per IRS Rules. Employer contributions are not subject to limits, but may not discriminate in favor of highly compensated individuals. If employer contributions exceed $500, additional compliance obligations apply.

³ The IRS does not impose HRA limits; limits may be set by the employer.

⁴ Employers may elect to have (i) a “grace” period for employees to use leftover funds from a previous plan year to pay for expenses incurred in the period up to 2 months and 15 days into the new plan year; or (ii) a carryover of up to $500 to the new plan year for payment of medical expenses during the entire year in which it is carried over.