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HRA, HSA, and FSA Comparison Chart

HRA HSA FSA
Health Reimbursement Arrangement Health Savings Account Flexible Spending Account
History IRS Code 105(h) passed in 2002 IRS Code 223 passed in 2003 IRS Code 125 passed in 1978
Overview The funding option that gives the employer the most control. Employer determines what services are covered, and retains control over unused funds. HSAs are created at financial institutions in the employees’ names and allow them to save and pay for medical expenses tax-free. Requires enrollment in a HDHP. FSAs allow employees to pay for medical expenses (deductibles, copays, etc.) tax-free. Requires employer involvement.
Account Owner Employer Employee Employee
Earnings Investments Generally, no earnings paid. Generally interest paid and investments allowed. Earnings grow tax-free. No earnings paid.
Excluded Persons S-Corp, LLC, LLP, Partnership Owners, & their Spouse; Non-dependent domestic partners Medicare enrolled persons (cannot fund H S A but can continue to claim money already set aside in the H S A trust account); Non-Dependent Domestic partners. S-Corp, LLC, LLP, Partnership Owners, & their Spouse: Non-dependent domestic partners.
Employer Tax Savings Contributions are tax-deductible when paid to the participant to reimburse an expense. Contributions are tax-deductible in the year the contribution is made. Contributions are tax-deductible when paid to the participant to reimburse an expense. As a result of salary reductions, lower adjusted employee income reduces employer-matching FICA & federal unemployment.
Employee Tax Savings Reimbursements for eligible expenses are excluded from income. Contributions can be pre-tax or are tax-deductible on the employee’s personal tax return. Funds earn interest tax-free. Reimbursements for qualified medical expenses are excluded from income. Employee may withdraw funds for non-medical expenses that are subject to income and excise tax. Contributions are made pre-tax. Reimbursements for eligible expenses are excluded from income.
Maximum Contributions Employer determines maximum contribution. HSA Statutory Limits Employer determines maximum contribution for health care FSA. Child care FSA is limited to $5,000.
Source of Funding Employer Employer, employee and for any other individuals Employer and employee
Who owns Unused Funds? Employer Employee (eligible individual name on the established trust account) Employer
Is Fund Portable?  No Yes, funds belong to the employee (or eligible individual). No
Do funds Roll Over? Yes, if employer specifies. Yes Maybe. An employer may establish up to a 2 1/2 month grace period or allow up to $500 rollover.
Eligible Medical Expenses 213 medical expenses; including health-related premiums and long term care insurance  premiums; excludes LTC services 213 medical expenses; excludes most  health related premiums unless unemployed; includes long term care premiums & services 213 medical expenses; excludes any health related premiums
Funding Requirement  Not required to pre-fund – uniform coverage rule does not apply. Funds must be present before withdrawal is made. Employer may contribute to HSA over time or all at once. Uniform coverage rule applies. Claims must be paid without regard to contribution amount.

Deductible 

 An HRA is not subject to a minimum deductible  (deductible amount is established by employer).

HSA Statutory Limits

 Healthcare FSA is not subject to a minimum deductible.

Maximum Out-of-Pocket 

 Employer sets levels.

HSA Statutory Limits

 Not applicable.
Allowable Expenses and Plan Restrictions  Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, including health insurance premiums. May not reimburse expenses for qualified long-term care services. Employer may restrict scope of reimbursements by plan design. If participant also has an HSA, HRA must be limited to dental expenses, vision expenses and expenses constituting preventive care. Can only be established by those who have qualifying high-deductible health plan coverage (deductible must meet statutory limit) and no disqualifying non-high deductible health plan coverage. Employees who are entitled to Medicare cannot establish or contribute. Allows otherwise unreimbursed medical Code Section 213(d) expenses, excluding most premiums. Employer cannot restrict the scope
of HSA distributions, except for expenses paid with an electronic payment card.		 Can be offered alone or in conjunction with a major medical plan. Allows otherwise unreimbursed Code 213(d) medical expenses, excluding premiums on qualified long-term care services. Employer may restrict scope of reimbursements by plan design. If participant also has an HSA, FSA must be limited to dental expenses, vision expenses and expenses constituting preventive care.
Non-Medical Expense Withdrawals No Taxable and subject to a 20 percent penalty (no penalty if age 65 or older, or disabled as defined by Code Section 72). Prior to 2011, penalty was 10%. No
June 17th, 2015 by The Diamond Benefit Group