There are three basic types of medical savings accounts: health savings accounts (HSAs), health flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). Although these accounts all provide a tax-advantaged way for employees to pay out-of-pocket medical expenses, each type of account is subject to its own set of requirements. Each account also has its own set of advantages for both the employer and employees.
The following chart compares key features of HSAs, health FSAs and HRAs. Employers can use this chart to help determine which type of medical savings account best fits their workforce’s needs.