What is a health savings account vs flexible spending account

HSA vs. FSA vs. HRAHealthcare Account comparison

Health Savings Accounts (HSAs), Healthcare Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) each let members use tax-advantaged dollars to pay for qualified medical expenses. But there are some important differences to keep in mind.

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HSA vs. FSA vs. HRAHealthcare Account comparison
Which one will benefit me the most?
Side-by-side comparison

Which one will benefit me the most?

Consider an HSA if you want to…

Save a bunch of money on healthcare premiums
Rollover your money and keep it year after year
Maximize your tax savings
Invest for future healthcare expenses

Consider an FSA if you want to…

Get a smaller deductible
Prioritize near-term healthcare expenses
Manage significant prescription costs

Consider an HRA if you want to…

Get free money from your organization
No, really. Free money. Take it!

Side-by-side comparison

Health Savings Accounts (HSAs), Healthcare Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) each let members use tax-free dollars to pay for qualified medical expenses. But there are some important differences to keep in mind.

	Health Savings Account HSA	Flexible Spending Account FSA	Health Reimbursement Arrangement HRA
Account overview	An HSA lets you use pre-tax money to pay for qualified medical expenses.1 HSAs require an HSA-qualified health plan in order to contribute. You can invest2 HSA dollars and grow tax-free earnings. Funds never expire—even if you change health plans, employers, or retire.	A Healthcare FSA similarly empowers members to set-aside pre-tax money to pay for eligible medical expenses.3 The difference is that members do not keep their unused FSA money and funds may be forfeited back your employer. FSAs are generally paired with traditional health plans.	An HRA is an employer-owned and -employer-funded account designed to help members bridge the gap on eligible healthcare expenses. HRAs are highly customizable and a great way for organizations to offset rising costs. Common eligible expenses include deductibles, coinsurance and copays.4
Health plan type	HSA-qualified/High-deductible health plan	Traditional health plan	Either HSA-qualified or traditional health plan (integrated with an ACA-compliant health plan)
Account ownership	Member-owned (take your HSA with you)	Employer-owned (no portability)	Employer-owned (no portability)
Who contributes?	Member, employer or family2	Member, employer	Employer only
Tax-deductible contributions	Yes – State, federal and FICA tax deductible for employers and members1	Yes – State, federal and FICA tax deductible for employers and members3	Yes – State, federal and FICA tax deductible for employers
Adjust contribution amount?	Anytime	Only during annual enrollment (or with qualifying life event)	Employer chooses at beginning of plan year
Tax-free distribution	Yes1	Yes	Yes
Debit card	Yes, availability varies by plan	Yes, availability varies by plan	Yes, availability varies by plan
Can members invest?	Yes2	No	No
Tax-free earnings	Yes	No	No
Long-term savings	Yes	No	No
Do funds expire?	Never	Yes	Yes
Account carryover	Yes—even if you change health plans, employers, or retire	Varies by plan—some FSAs offer grace periods or limited carryover (up to $570 for 2022)	No
Contribution limits	2022 $3,650 (Individual coverage) $7,300 (Family coverage) View all HSA limits and guidelines	2022 $2,850 (Individual or family coverage.)	2022 Varies by plan type
Account compatibility	LPFSA, DCFSA, HRA	LPFSA, DCFSA, HRA	FSA, HSA6, LPFSA, DCFSA
How do I enroll?	You can enroll in an HSA-qualified health plan and sign up for an HSA during your organization’s annual enrollment. If you have a high-deductible health plan on your own—not offered through an employer—you can sign up for an HSA right now.	You can enroll in a health plan and sign up for an FSA during your organization’s annual enrollment period.	You can enroll in a health plan and sign up for an HRA during your organization’s annual enrollment period. Some plans feature automatic enrollment. Consult your annual enrollment materials to learn how to enroll.

An HSA lets you use pre-tax money to pay for qualified medical expenses.1 HSAs require an HSA-qualified health plan in order to contribute. You can invest2 HSA dollars and grow tax-free earnings. Funds never expire—even if you change health plans, employers, or retire.
A Healthcare FSA similarly empowers members to set-aside pre-tax money to pay for eligible medical expenses.3 The difference is that members do not keep their unused FSA money and funds may be forfeited back your employer. FSAs are generally paired with traditional health plans.
An HRA is an employer-owned and -employer-funded account designed to help members bridge the gap on eligible healthcare expenses. HRAs are highly customizable and a great way for organizations to offset rising costs. Common eligible expenses include deductibles, coinsurance and copays.4
HSA-qualified/High-deductible health plan
Traditional health plan
Either HSA-qualified or traditional health plan (integrated with an ACA-compliant health plan)
Member-owned
(take your HSA with you)
Employer-owned
(no portability)
Employer-owned
(no portability)
Member, employer or family2
Member, employer
Employer only
Yes – State, federal and FICA tax deductible for employers and members1
Yes – State, federal and FICA tax deductible for employers and members3
Yes – State, federal and FICA tax deductible for employers
Anytime
Only during annual enrollment (or with qualifying life event)
Employer chooses at beginning of plan year
Yes
Yes
Yes, availability varies by plan
Yes, availability varies by plan
Yes, availability varies by plan
No
No
Yes
No
No
Yes
No
No
Never
Yes
Yes
Yes—even if you change health plans, employers, or retire
Varies by plan—some FSAs offer grace periods or limited carryover (up to $570 for 2022)
No
2022
$2,850
(Individual or family coverage.)
2022
Varies by plan type
LPFSA, DCFSA, HRA
LPFSA, DCFSA, HRA
FSA, HSA6, LPFSA, DCFSA
You can enroll in an HSA-qualified health plan and sign up for an HSA during your organization’s annual enrollment. If you have a high-deductible health plan on your own—not offered through an employer—you can sign up for an HSA right now.
You can enroll in a health plan and sign up for an FSA during your organization’s annual enrollment period.
You can enroll in a health plan and sign up for an HRA during your organization’s annual enrollment period. Some plans feature automatic enrollment. Consult your annual enrollment materials to learn how to enroll.

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1HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.Return to content

2Investments are subject to risk, including the possible loss of the principal invested, and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc. Investing through the HealthEquity investment platform is subject to the terms and conditions of the Health Savings Account Custodial Agreement and any applicable investment supplement. Investing may not be suitable for everyone and before making any investments, review the fund’s prospectus.Return to content

3FSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize FSA funds as tax deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.Return to content

4In addition to restrictions imposed by law, your employer may limit what expenses are eligible for reimbursements. It is the members’ responsibility to ensure eligibility requirements as well as if they are eligible for the plan and expenses submitted. Return to content

5Some employers offer a base contribution and/or a contribution match. Please carefully review your annual enrollment materials to find out what’s available.Return to content

6HRA must be limited in scope to preserve HSA.Return to content