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September 18, 2017

Differences between an HSA, HRA, and FSA

Comparing three of the most common tax-advantaged benefits:

Choosing the account that best fits your needs is essential for getting the most out of your benefits during the plan year, but it can also impact the future. Let’s take a closer look.

What do an HSA, FSA, and HRA have in common?

They are all tax-advantaged accounts. Simply stated, money is deposited into the account before taxes are taken out, lowering your taxable income and increasing your take-home pay.

What are the differences between an HSA, FSA, and HRA?

An HSA is the only account owned by the employee. The balance can be invested and carried over to continue growing yearly while an HRA and FSA are employer-owned. Each type of account has unique features that set it apart, and employees can choose the combination that addresses the needs of their specific life situation. To illustrate, here’s a comparison chart:

There are differences in an HSA, HRA, and FSA that include account ownership, plan funding, and portability. HSA vs HRA: An HSA is the only account owned by the employee and can be rolled over to grow from year to year while an HRA is owned by the employer, employer funded, and the balance can't be carried over. In contrast, an FSA is owned by the employer but funded by the employee.

Planning your benefits is critical.

Decisions like whether or not you are getting married, changing careers, saving for retirement, or starting a family can affect which plan option is best for you. Although planning isn’t something everyone loves to do, considering these major life events will allow you to make sure you have a plan that best serves you and your family. 

The bottom line is that it’s worth the extra time to educate yourself and match your goals with the possibilities. Here are a few questions to consider:

Ultimately, with a little planning and education, you can choose a health plan and savings option best benefits you and your family.

Learn more about Health Savings Accounts with our Ultimate Guide.

What’s in this article?

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