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Sub-Sections:Comparing HSAs and HRAs
For Most Businesses, HRAs are Superior to HSAs
Which is better: A Health Reimbursement Arrangement (HRA) or a Health Savings Account (HSA)? The answer depends on what you are trying to accomplish and whether you are an employer or an employee.
What is a Health Reimbursement Arrangement (HRA)?
A Health Reimbursement Arrangement, or HRA, is notional account that employers use to reimburse employees’ healthcare expenses. Funds do not accumulate in a separate account; rather, employers pay only after their employees incur expenses.
What is a Health Savings Account (HSA)?
A Health Savings Account, or HSA, is a financial account established by an individual to pay for qualified medical expenses. HSAs must be linked with a qualified high-deductible health insurance plan, and anyone can contribute to it.
Which One is Right for Your Business?
Several characteristics make HRAs superior for employers, while still benefiting employees. HSAs generally favor employees but are more costly to employers. Here are key similarities and differences you should remember:
Read more about HSAs vs HRAs.
