HSA vs. FSA vs. HRA — What's the Difference

HSAs, FSAs, and HRAs are all tax-advantaged ways to pay for medical expenses — but they work very differently. Who owns the account, what health plan you need, and whether unused money carries over are not small details; they directly affect how you should use each account and how much you can save. This page compares the three types side by side so you can make informed decisions during open enrollment and throughout the year.

The core difference: ownership

The most fundamental distinction is who owns the money:

• HSA — you own it. Funds belong to you the moment they are deposited, whether contributed by you or your employer. If you change jobs, switch plans, or retire, the account and every dollar in it goes with you.
• FSA — your employer owns it. The account is an employer benefit. If you leave your job before spending the balance, you may lose unspent funds (COBRA rules apply in some cases).
• HRA — your employer owns it. You contribute nothing; the employer decides what goes in, what you can spend it on, and what happens to unused funds.

That ownership difference ripples into every other rule about these accounts.

Side-by-side comparison

Feature	HSA	FSA	HRA
Who owns the account	Employee	Employer	Employer
Who can contribute	Employee and/or employer	Employee (via payroll)	Employer only
Required plan type	HDHP only	Any employer plan	Any plan (employer sets rules)
Annual IRS contribution limit (2024)	$4,150 self / $8,300 family	$3,200	No IRS limit (employer discretion)
Rollover	Full rollover, no limit	Up to $640 (2024); or 2.5-month grace period	Employer sets rules
Portable if you leave job	Yes — fully portable	No — forfeited at year-end	No — employer-owned
Investable	Yes (after threshold)	No	No
Available at plan start	No — balance must accumulate	Yes — full annual election available Day 1	Yes — employer funds when ready
Medicare eligibility ends contributions	Yes — cannot contribute after Medicare enrollment	No effect	No effect

HSA rules in depth

To open and contribute to an HSA, you must meet four IRS requirements:

1. Enrolled in a qualifying HDHP. The IRS sets minimum deductibles annually. In 2024: $1,600 for self-only coverage, $3,200 for family coverage.
2. No other disqualifying coverage. A general FSA, Medicare, Tricare, or being covered under a spouse’s non-HDHP plan typically disqualifies you.
3. Not enrolled in Medicare. Once you enroll in any part of Medicare, you can no longer contribute to an HSA (though you can still spend existing funds).
4. Not claimed as a dependent on someone else’s return.

The HSA triple tax advantage — contributions are pre-tax, growth is tax-free, and withdrawals for qualified expenses are tax-free — makes it one of the most tax-efficient savings vehicles available in the U.S. tax code.

After age 65, non-medical withdrawals are taxed as ordinary income (like a traditional IRA) but are not penalized, which makes the HSA a flexible supplemental retirement account for those who accumulate significant balances.

FSA rules in depth

An FSA is simpler to use but less flexible to keep. The key feature is front-loading: your full annual election amount is available on the first day of the plan year, even though your payroll contributions accumulate gradually through the year. This makes FSAs valuable for people who anticipate early-year medical expenses.

The use-it-or-lose-it rule is the main drawback. The IRS allows plans to offer one of two relief options:

• Rollover: up to $640 (2024) in unused funds rolls to the next plan year
• Grace period: up to 2.5 additional months to spend the prior year’s funds

Plans are not required to offer either option, and they cannot offer both simultaneously. Check your specific plan documents.

If you leave your job, your FSA balance typically cannot be taken with you — though COBRA continuation may allow you to continue the FSA for the remainder of the plan year by paying the full contribution amount yourself.

Limited-Purpose FSA (LPFSA)

If you have an HSA and your employer also offers an FSA, you can use an LPFSA — a restricted version that covers only dental and vision expenses. Because an LPFSA cannot pay for general medical expenses before your deductible is met, it does not interfere with HSA eligibility. This combination is increasingly common and lets you preserve HSA funds for long-term growth while spending dental and vision costs through the LPFSA.

HRA rules in depth

An HRA is entirely employer-designed. The employer:

• Decides how much to fund each year
• Sets what expenses are reimbursable (within IRS rules)
• Decides whether unused funds roll over to the next year
• Decides what happens to unused funds when you leave

Common HRA types include the standard group HRA, the Individual Coverage HRA (ICHRA), which can reimburse individual market plan premiums, and the Qualified Small Employer HRA (QSEHRA) for small businesses. Each has different rules.

Because HRAs are employer-owned, you cannot take the balance with you when you leave. Some employers allow a partial carryover as a retention incentive; many do not.

Documents and terms you’ll see

When reviewing benefits materials, plan documents, and enrollment guides, watch for:

• High-Deductible Health Plan (HDHP) — the plan type required to open and contribute to an HSA; the IRS updates minimum deductible thresholds annually
• HSA — the portable, employee-owned account that rolls over fully and can be invested; the long-term wealth-building option
• FSA — the use-it-or-lose-it employer account that is fully available from day one of the plan year
• LPFSA — the dental-and-vision-only FSA that can coexist with an HSA; useful if your employer offers both an HDHP and an FSA

Choosing between accounts during open enrollment

When evaluating your options:

Choose an HSA if: you are enrolled in or can switch to an HDHP, you are healthy and expect relatively low medical costs this year, you want to accumulate funds for retirement healthcare costs, or you plan to invest the balance for long-term growth.

Prioritize an FSA if: you have predictable near-term medical expenses (braces, scheduled surgery, regular prescriptions), you are not in an HDHP, or your employer contributes to the FSA on your behalf.

Use an HRA if: it is offered by your employer and you have the flexibility to time expenses — some HRAs require you to incur expenses before requesting reimbursement, which affects cash flow.

Many employees can use more than one account type strategically — for example, pairing an HDHP with an HSA and an LPFSA to cover dental and vision separately while letting the HSA grow. If your employer offers multiple options, reviewing the plan documents side by side is the most reliable way to understand the interaction of the accounts.

For details on which specific expenses are covered under IRS rules, see the hsa-eligible-expenses page, and the health savings accounts guide for contribution limits and account mechanics.