Lowering Out-O-Pocket Healthcare Costs

Understanding HSAs, HRAs, and FSAs

When preparing for open enrollment, it is important to understand your options. Health Saving Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and Flexible Spending Accounts (FSAs) are often offered in conjunction with a health plan. Knowing the advantages of each can allow for an easier open enrollment process.

Health Savings Account (HSA)

An HSA is a tax-advantaged account used in conjunction with a High Deductible Health Plan (HDHP) with the purpose of setting aside money to pay for qualified medical expenses. An HSA may be used to pay for the HDHP’s deductibles, copayments, coinsurance, and other qualified expenses. Additionally, an HSA is advantageous as its funds do not have a deadline by which they need to be spent annually. Instead, the funds within the account roll over each year.

Health Reimbursement Arrangement (HRA)

An HRA is an employer-funded plan that reimburses employees for qualified medical expenses. Unlike the HSA, the HRA is not tied to an HDHP and can work with any health plan.

It is important to know: to use an HRA, a participant must first incur a qualified expense, and then the HRA program will reimburse the funds paid. Funds cannot be requested prior to an expense.

Flexible Spending Account (FSA)

Like the HSA, the FSA is tax-advantaged. Employees may set aside a specific amount of money per pay to contribute to their FSA.  These funds can be used for qualified out-of-pocket medical expenses. Like the HRA, the FSA can be used with any type of health plan. Funds within an FSA must be used by a specified date, or the money will be forfeited.

If an employee is interested in an FSA, they must determine how much they wish to contribute toward the account during open enrollment. Changes typically cannot be made regarding the FSA election during the plan year unless the employee experiences a qualifying life event.


If you are offered an HSA, HRA, or FSA and have questions, please contact your dedicated Creative Benefits team member for more information.