Health Savings Account Comparison: Difference between HSA, HRA, and FSA

HSA, HRA, FSA – Which is Right for Your Business?


These three kinds of accounts can help you to pay for healthcare expenses. Costs such as deductibles, co-pays, and prescription drugs can be better managed by implementing one of these accounts. However, each account has slight differences that should be considered before you decide which is right for your business and your employees.


Health Savings Account


An HSA is the only option for people who elect an HSA eligible insurance plan. The account is under the individuals name and can eventually use any unused funds during retirement once they reach 59 and a half. As the other two options are owned by employers, if your employees buy their own insurance, they’re automatically ineligible for HRA and FSA.

HSAs let employees invest money in these accounts, but they must report the account when they do their expenses. An HSA must be covered by qualified HDHP and not covered by any plan that offers medical expenses coverage under the deductible.


Health Reimbursement Account


HRAs are owned by the employer and can only have money put in by the employer. This kind of account is essentially an employer-funded plan that reimburses employees for medical expenses and insurance premiums.

HRAs let employers claim a tax deduction for any reimbursements made via this kind of plan. Any reimbursements received by employees from their HRA are usually tax-free. Employees must incur the expense before having it reimbursed.


Flexible Spending Account


FSAs let employees save on taxes while also paying for qualified expenses. These accounts are owned by the employer and give both you and your employees the chance to put money into them. There are annual limits set each year by the IRS and money left at the end of the year can be retained by the employer. The “flexible” part of FSAs come from the fact that employers have the most options to what kind of spending account to offer to employees.


How Benely Can Help


The world of health insurance is incredibly complex, and it pays off to have experts on your side. Thankfully, Benely can help you decide what kind of health spending account is right for your business. Contact us today and we’ll make sure that you and your employees are matched to the perfect option.