FSA vs. HSA vs. HRA
What’s the Difference Between an FSA, HSA, and HRA for Employee Benefits?
FSAs, HSAs, and HRAs all help employees pay for healthcare costs with tax-advantaged funds, but they work differently: FSAs are employer-owned and use-it-or-lose-it; HSAs are employee-owned and portable; HRAs are entirely employer-funded and controlled.
An FSA is funded through employee pre-tax salary deferrals, owned by the employer, and generally must be used within the plan year. An HSA is owned by the employee, fully portable, and available only with a qualifying high-deductible health plan—unused funds roll over indefinitely. An HRA is funded entirely by the employer, with no employee contributions, and the employer sets the reimbursement terms.
The right structure often depends on the health plan offered: HSAs only pair with high-deductible plans, while FSAs and HRAs can pair with virtually any plan design.
FSA vs. HSA vs. HRA Key Facts and Ownership Rules:
- FSA: employer-owned, employee pre-tax contributions, generally use-it-or-lose-it.
- HSA: employee-owned and portable, requires a high-deductible health plan, funds roll over indefinitely.
- HRA: entirely employer-funded, no employee contributions, employer sets and controls terms.
- Only HSAs require pairing with a high-deductible health plan.
Frequently Asked Questions
Which of these does an employee keep if they change jobs?
An HSA—it’s employee-owned and fully portable.
Can an employer offer both an FSA and an HSA?
Generally only a “limited-purpose FSA” (dental/vision only) can be paired with an HSA.
Do employees contribute to an HRA?
No—HRAs are funded entirely by the employer.
Can unused FSA or HSA funds be used for over-the-counter medications?
Yes—both FSAs and HSAs can reimburse eligible over-the-counter medications and menstrual care products without a prescription.
What happens to HSA funds if an employee leaves the company?
The employee keeps the HSA and all funds in it, since the account is individually owned and fully portable regardless of employment status.
Related terms: Dependent Care FSA, Section 125 Cafeteria Plan, Health Insurance Open Enrollment