Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged account created for or by individuals covered under high-deductible health plans (HDHPs) to save for qualified medical expenses. Contributions are made into the account by the individual or their employer and are limited to a maximum amount each year. The contributions are invested over time and can be used to pay for qualified medical expenses, such as medical, dental, acupuncture, chiropractic, vision care and prescription drugs.

Flexible Spending Account(FSA)

A flexible spending account (FSA) is a type of savings account that provides the account holder with specific tax advantages. An FSA is sometimes called a “flexible spending arrangement” and can be established by an employer for employees. The account allows you to contribute a portion of your regular earnings before tax; employers also can contribute to employees’ FSAs. Distributions from the account must be used to reimburse the employee for qualified expenses related to qualified medical expenses, such as medical, dental, acupuncture, chiropractic, vision care and prescription drugs.

Health Reimbursement Arrangement (HRA)

A health reimbursement arrangement is a plan set up by an employer to cover medical expenses for its employees. The employer decides how much it will put into the plan, and the employee can request reimbursement for actual medical expenses incurred up to that amount. All employees in the same class must receive the same HRA contribution. An HRA is not an account. Therefore, employees cannot withdraw funds in advance and then use them to pay medical expenses. Instead, they must incur the expense first, then have it reimbursed. Reimbursement at the time of service is possible if the employer provides an HRA debit card.