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Difference between HSA and HRA

Difference between HSA and HRA

Both an HSA and an HRA are tax-advantaged accounts that can be used to save for medical expenses. However, there are some key differences between these two accounts. An HSA is a pre-tax account, while an HRA is a post-tax account. An HSA can be used to pay for current medical expenses, while an HRA can only be used to reimburse past medical expenses. Finally, HSAs have looser eligibility requirements than HRAs.

What is HSA?

HSA refers to a Health Savings Account. It is a type of savings account that allows individuals to save money for future medical expenses on a tax-free basis. Individuals who have HSA accounts can use the money in their account to pay for qualifying medical expenses, such as doctor’s visits, prescription drugs, and dental care. HSA accounts are typically used in conjunction with high-deductible health plans, which have lower premiums than traditional health plans. In order to be eligible to open an HSA account, individuals must be enrolled in a high-deductible health plan. HSA accounts can be opened at most banks and credit unions.

What is HRA?

An HRA, or Health Reimbursement Account, is a type of account that can be used to reimburse medical expenses. HRAs are employer-funded, and they are only available to employees who have a high-deductible health plan. Funds in an HRA can be used to pay for a variety of medical expenses, including deductibles, copayments, and coinsurance. Unlike a flexible spending account (FSA), unused funds in an HRA can be carried over from year to year. However, there are some restrictions on how HRA funds can be used. For example, HRA funds cannot be used to pay for insurance premiums or non-essential medical services. Employers can decide how much money to contribute to an HRA, and they can also set limits on the types of expenses that can be reimbursed. However, any money contributed to an HRA must be used within the calendar year; it cannot be cashed out or rolled over into the following year.

Difference between HSA and HRA

HSA and HRA are two types of accounts that help Americans save for healthcare costs. HSA is a Health Savings Account which is available to Americans who are enrolled in a High Deductible Health Plan. The funds in the HSA can be used to pay for qualified medical expenses tax-free. HRA is a Health Reimbursement Account that is offered by some employers to help employees with medical expenses. The funds in the HRA can be used to reimburse employees for qualified medical expenses, and any unused funds roll over from year to year. HRA is only available to employees who are enrolled in a qualifying health plan. Both HSA and HRA are tax-advantaged accounts, but HSA offers more flexibility since the funds can be used to pay for any qualified medical expense.


HSAs and HRAs are both excellent options for employees looking for tax-advantaged ways to save for medical expenses, but there are some important differences between the two. Employees should carefully consider which option would work best for them, based on their individual needs and budget.

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