HSA vs FSA

A high-deductible health plan (HDHP) and not be enrolled in disqualifying coverage such as most Medicare or a general-purpose FSA — An HSA can only be used by someone covered under a high-deductible health plan (HDHP) that meets the statutory minimum deductible and maximum out-of-pocket limits, and who is not enrolled in disqualifying coverage such as most Medicare coverage or a general-purpose health FSA. HSA contributions are tax-deductible, account growth is tax-deferred, and qualified withdrawals for medical expenses are tax-free. HSAs pair with HDHPs in consumer-driven health arrangements that trade higher deductibles for premium savings and tax advantages, making the HDHP link the fundamental eligibility rule.

National insurance concept

It is funded solely by employer contributions, and unused employer amounts generally revert to the employer at the end of the plan year or when employment ends — A health reimbursement arrangement (HRA) is an employer-funded account used to reimburse employees for qualified medical expenses. Because the money comes from the employer, the HRA belongs to the employer: unused balances generally revert to the employer at the end of the plan year or when the employee leaves the job, and the account is not portable. This is the fundamental contrast with an HSA, which is owned by the individual and travels with the employee. The exam pairs HRA with HSA and FSA as consumer-directed health plan (CDHP) accounts.

National insurance concept