HRA vs. HSA (Reimbursement Arrangements vs. Savings Accounts)

Which is better: A health reimbursement arrangement (HRA) or a health savings account (HSA)?

HRAs are entirely funded by the employer and available to all employees, while HSAs are funded by both the employer and employee and available only to employees with a qualifying high-deductible health plan (HDHP).

The answer as to which is better, however, depends on what you are trying to accomplish and whether you are an employer or an employee.

Note: Legislation passed in December 2016 established a new form of Health Reimbursement Arrangement, the qualified small employer health reimbursement arrangement (QSEHRA). The following blog post compares the benefits of a QSEHRA to an HSA.