An HRA is your employer's way of reimbursing you tax-free for medical expenses. Your employer funds it completely and decides how much to contribute each year. You submit receipts for qualified medical costs like deductibles, copays and prescriptions, then get reimbursed. The money never becomes yours. Your employer keeps unused funds, and you typically lose access when you leave the job.
HRA vs. HSA: Which Plan Is Right for You
Updated: October 10, 2025
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Key Takeaways
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 typically end when you leave.
What Is an HRA?
What Is an HSA?
An HSA works like a personal medical savings account you control completely. You contribute pre-tax money, invest it for growth, and withdraw tax-free for medical expenses. Your employer can contribute too, but you own every dollar. The account stays with you through job changes and into retirement. After you reach 65, you can use HSA funds for anything without penalties, just paying regular income tax.
What Is the Difference Between HRA and HSA
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 |
Can You Have HSA and HRA?
You can have an HSA and an HRA only if your HRA meets the specific requirements by the IRS. Most standard HRAs disqualify you from HSA contributions because they provide coverage before you meet your high-deductible health plan deductible. Take note that this is different from having two health insurance plans, which has separate coordination rules.
Below is a list of types of HRAs that work with HSAs:
- 1
Limited-purpose HRA:
Covers only preventive care, dental and vision expenses. You maintain full HSA contribution rights because it doesn't pay for general medical costs before your deductible. This lets you save in your HSA while getting help with specific health care categories.
- 2
Post-deductible 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 hit these thresholds, which preserves your HSA eligibility.
- 3
Retirement HRA:
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.
- 4
Suspended HRA:
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.
WHY A STANDARD HRA DOESN'T WORK WITH AN HSA
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.
Which Is Better HSA or HRA
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 | Face high medical costs 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 |
Bottom Line
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 typically ends when you leave. Choose based on your employment stability, medical expenses and long-term savings goals.
Difference Between HRA and HSA: FAQ
We've answered the most frequently asked questions about HRA vs HSA to help you understand these accounts:
Is HSA the same as HRA?
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 typically end when you leave. HSAs require high-deductible health plans, while HRAs work with any employer plan.
Is HRA or HSA better for pregnancy?
An HSA typically 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 face immediate high medical costs but ends when you leave your job. Learn more about health insurance for pregnancy.
What happens to my HRA when I leave my job?
Most HRAs end when you leave your job because your employer owns and controls the account. You'll need to get new health insurance when transitioning between employers. However, some employers let you use remaining funds for expenses incurred before your termination date, but rules vary by company. Your HSA stays with you permanently, regardless of job changes, including all contributed funds and investment growth.
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!
Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.
sources
- IRS.gov. "Tax forms and instructions." Accessed October 7, 2025.