Updated: November 3, 2025
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You own your HSA permanently and contribute up to $4,300 for individual or $8,550 for family coverage, while your employer owns and fully funds your HRA.
HSAs require high-deductible health plans and offer investment growth, but HRAs work with any employer plan without contribution limits.
The difference between HRA and HSA centers on portability: HSA follows you between jobs, while HRAs often end when you leave.
A Health Reimbursement Arrangement (HRA) is an account your employer sets up to pay you back for medical expenses without taxing that money. Your employer adds the funds and decides how much to contribute each year.
To get reimbursed, submit receipts for qualified costs such as deductibles, copays or prescriptions. The account belongs to your employer, so any leftover money stays with the company if you leave your job.
An HSA is a personal medical savings account that you fully own and manage. You can add pre-tax money, let it grow through investments and spend it tax-free on qualified medical expenses.
Employers can also contribute, but the money is always yours to keep. The account follows you through job changes and into retirement. After age 65, you can use HSA funds for any purpose without penalties, though you’ll pay regular income tax on non-medical withdrawals.
When comparing HSA vs HRA, the biggest difference is ownership. You own an HSA, contribute $4,300 for self-only or $8,550 for family coverage in 2025, and keep the money forever. Your employer owns and funds an HRA with no contribution from you.
HSAs need a high-deductible health plan, while HRAs work with any employer plan. Knowing these differences helps you maximize your health care benefits and savings potential.
Ownership | You own it forever | Employer owns it |
Who Can Contribute | You, employer, or both | Only employer |
Employee Contribution Allowed | Yes | No |
2025 Contribution Limits | $4,300 self-only; $8,550 family | No IRS limit; Excepted benefit HRA: $2,150 |
Health Plan Required | High-deductible health plan | Any employer plan |
Investment Growth | Yes, tax-free growth | No interest earned |
Portability | Stays with you when you leave job | Usually lost when you leave |
Rollover | Always rolls over year to year | Employer decides |
Tax Return Reporting | Yes, file Form 8889 | No, employer handles it |
Non-Medical Withdrawals | Allowed with 20% penalty before 65; no penalty after 65 | Not allowed |
Flexibility | You adjust contributions during year | Employer controls amounts |
Tax Benefits | Triple tax advantage (deductible, growth, withdrawals) | Tax-free reimbursements only |
Account Access After 65 | Becomes like retirement account | Depends on employment status |
You can have both an HSA and an HRA, but only if your HRA follows specific IRS rules. Most traditional HRAs make you ineligible for HSA contributions because they start covering costs before you reach your high-deductible health plan’s deductible.
This isn’t the same as having two health insurance plans, which follow their own coordination rules. Here are the types of HRAs that can work with an HSA:
Covers only preventive care, dental and vision expenses. You maintain full HSA contribution rights because it doesn't pay for general medical expenses before your deductible. This lets you save in your HSA while getting help with specific health care categories.
This type of HRA only reimburses expenses after you meet your HDHP minimum deductible. For 2025, HDHPs must have minimum deductibles of $1,650 for individuals and $3,300 for family coverage. Your HRA can’t pay a single claim until you reach these amounts, which keeps you eligible for HSA contributions.
Becomes available only after you retire from the company offering it. Since you no longer work there, your employer's HSA eligibility is not affected. Also, if you're retiring before 65, you'll need health insurance for retirees to bridge the gap to Medicare.
Some employers let you temporarily suspend your HRA participation to contribute to an HSA. You can reactivate the HRA later when you no longer need HSA contributions, giving you flexibility based on your current health care needs.
Regular HRAs that pay medical expenses before you meet your deductible count as additional health coverage under IRS rules. This violates the requirement that HSA participants can only have HDHP coverage, making you ineligible to contribute.
The right choice depends on your health expenses, employment status and savings goals. HSAs offer more flexibility and portability, while HRAs provide employer-funded coverage without requiring personal contributions.
Choose an HSA if you: | Choose an HRA if you: |
|---|---|
Want to build long-term tax-free savings | Prefer employer-funded coverage with no personal cost |
Plan to change jobs or become self-employed | Have stable employment with a generous employer |
Have minimal current medical expenses | Handle high medical expenses your employer helps cover |
Earn enough to contribute regularly | Want simpler administration with fewer decisions |
Value investment growth potential | Need immediate help with medical expenses |
Want to save for retirement healthcare costs | Don't want to manage contribution decisions |
HSA offers you permanent ownership with up to $4,300 individual or $8,550 family contributions in 2025, plus investment growth and job portability. Your employer-funded HRA provides immediate expense coverage without personal contributions but ends when you leave. Choose based on your employment stability, medical expenses and long-term savings goals.
HRAs and HSAs can be confusing, so we’ve answered a few common questions to help you understand the differences:
These accounts work completely differently. You own an HSA permanently with investment growth potential, while your employer owns and controls your HRA. HSA stays with you when you change jobs, but HRAs often end when you leave. HSAs require high-deductible health plans, while HRAs work with any employer plan.
An HSA usually works better for pregnancy if you're healthy before conceiving. You contribute up to $8,550 for family coverage in 2025, own the funds forever, and can save tax-free for future expenses. HRAs provide employer-funded coverage without personal contributions, which helps if you have immediate high medical expenses but ends when you leave your job. Learn more about health insurance for pregnancy.
Most HRAs end once you leave your job since your employer owns and manages the account. You’ll need to get new health insurance while transitioning to another employer or coverage option.
Some companies may let you use any remaining funds for eligible expenses you incurred before your last day, but rules vary. Your HSA stays with you permanently, including all contributions and investment growth, no matter where you work next.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.
