HSA Vs. HRA: Which One Is Right For You?

Consider getting a health savings agreement or health reimbursement account if you wish to take better control over your money on health care. HSA and HRA may look similar, but there are some differences. So, which one is right for you?

What’s The Difference?

One difference between HSA and HRA is that the employer owns HRA while the employee owns HSA, which means that employees can take the HSA plan when they lose or change jobs. If an employee with an HRA fund loses or changes work, HRA defaults any remaining money to the employer. Also, the employer provides the money in an HRA. In contrast, anyone can contribute to HSA funds, including the employee, the employer, and family members. You can use the HSA fund to pay for IRS-defined health care bills, including COBRA premiums and long-term health care. Here are some advantages of each type of fund to help you know which one is best for you.

Advantages of HSA

  • Asset accumulation
  • Reduced record keeping
  • Employer tax benefit
  • Members manage their HSA funds
  • Investment with Tax-free contributions
  • Offer long-term employees savings in retirement
  • Reduce company expenses through the cost-sharing benefits.

 Advantages of HRA

  • Asset accumulation
  • Can be integrated with an FSA
  • Funded entirely by the employer
  • Total control over the HRA plan
  • Offers more tax-favored benefit
  • Funds are available immediately after you get the coverage.

As you can see, both can help pay healthcare expenses. Your choice depends on your needs.