Definitions
HSA = Health Savings Account
FSA = Flexible Spending Account
HRA = Health Reimbursement Arrangement
| Feature | HSA | FSA | HRA |
|---|---|---|---|
| Who owns the account? | Employee (portable if they change jobs). | Employer (employee can use but doesn’t own the funds). | Employer (fully owned and funded by employer). |
| Who contributes? | Employee and/or employer. | Employee and/or employer. | Employer only. |
| Eligibility | Must be enrolled in a high-deductible health plan (HDHP). | Typically available regardless of the health plan. | Employer determines eligibility. |
| Contribution limits (2025) | $4,150 for individuals; $8,300 for families (IRS limit). | $3,050 per individual (IRS limit). | Set by employer (no IRS limit). |
| Rollover of funds | Yes, unused funds roll over year to year. | Limited rollover (up to $610 in 2025) or use-it-or-lose-it. | Determined by employer; often does not roll over. |
| Withdrawals | For qualified medical expenses (tax-free). Non-qualified withdrawals incur penalties and taxes. | For qualified medical expenses only. | Reimbursements only for qualified expenses. |
| Portability | Fully portable; remains with the employee. | Non-portable; tied to the employer. | Non-portable; tied to the employer. |
| Impact on other benefits | Can work alongside an FSA (limited purpose) or HRA. | Limited to one FSA per person; can’t combine with HSA if not limited purpose. | Can work alongside HSA or FSA depending on the plan design. |
| Key use cases | Long-term savings for healthcare expenses and retirement. | Short-term healthcare or dependent care expenses. | Employer-controlled health expense reimbursement. |
Important Notes
- HSA: Best for individuals who want long-term healthcare savings and are enrolled in an HDHP. Funds are portable and can grow tax-free for future expenses.
- FSA: Ideal for predictable annual healthcare expenses, but be mindful of the “use-it-or-lose-it” rule.
- HRA: Fully funded by employers and can vary significantly in design based on the employer’s plan.
Last Updated by : Nina O ( Jan 9,2025