Understanding Your HSA, HRA, and FSA: What’s the Difference?

If you're staring at a jumble of letters like HSA, HRA, and FSA and wondering what they actually mean—you're not alone. These benefit account types can seem confusing, but they’re powerful tools to help employees save money and manage healthcare costs. Here's a quick breakdown to help you (and your team) make sense of it all.

HSA: Health Savings Account

• Who qualifies? Only those enrolled in a High Deductible Health Plan (HDHP).

• Who owns it? The employee owns the account.

• What’s great about it? Contributions are tax-free, funds roll over year to year, and the account is portable(employees take it with them if they leave).

• What can it be used for? Qualified medical expenses—like doctor visits, prescriptions, dental, vision, and even some over-the-counter items.

HRA: Health Reimbursement Arrangement

• Who qualifies? Set up and funded only by the employer.

• Who owns it? The employer owns the account.

• What’s great about it? No employee contributions required; employers choose what’s covered and how much is reimbursed.

• What can it be used for? Medical expenses defined by the employer—often copays, deductibles, and other out-of-pocket costs.

FSA: Flexible Spending Account

• Who qualifies? Available with traditional plans (not HDHP-only).

• Who owns it? Technically the employer, but employees decide how much to contribute.

• What’s great about it? Contributions are pre-tax, reducing taxable income.

• What’s the catch? It’s “use it or lose it”—unused funds may be forfeited at the end of the year, depending on plan rules.

  
  

So Which One Is Right for You?

It depends on your health plan and what kind of flexibility and control you want. Employers can offer one or even a mix of these accounts, depending on their benefits strategy.

Still not sure what fits your company or team best? Reach out to us—we’re happy to help you build a benefits package that makes sense.