HSAs, FSAs, and HRAs: What’s The Difference?

Before Health Savings Accounts came along, people used Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) to save money for their health care expenses.

But these accounts don’t offer the same advantages as a Health Savings Account (HSA).

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Flexible Savings Accounts — Use It or Lose It

An FSA is generally set up through an employer. To put funds in a Flexible Savings Account, your employer can use a portion of your paycheck. These deposits are tax-free because they go into your FSA before income taxes are taken out of your pay. You can withdraw money from your FSA to pay for almost any health-related expense.

Compared to a Health Savings Account, the biggest disadvantage of using an FSA is that your leftover savings are forfeited at the end of the year. Employers also can’t make contributions to your FSA, so the money lost at the year’s end was your earned income.

Health Savings Accounts let you keep all your savings every year. In fact, your leftover savings actually earns interest just like a regular bank account. Employers are also allowed to put funds in your HSA — and those contributions are yours to keep.

Health Reimbursement Arrangements — It’s Not Up To You

A Health Reimbursement Arrangement isn’t a savings account. Instead, an HRA is just a certain amount of money set aside by the employer to reimburse workers for some health care costs.

The costs that are reimbursed are completely decided by an employer. And you have no control over the funds.

With a Health Savings Account, you control all your savings. And it’s up to you to decide how to spend it.

If you’re ready to see what your HSA options are, let Go Health Insurance help. Use our Instant Quote Tool to view health insurance plans compatible with HSAs online, and get connected with licensed agents for expert advice. You can also speak with an agent directly or see plans that match your budget with the Plan Finder.

Or learn more about Health Savings Accounts.