HSA vs HRA: The Difference

Short answer

An HSA (Health Savings Account) is a tax-advantaged savings account you own and control. You contribute pre-tax dollars, and the money stays yours forever. An HRA (Health Reimbursement Arrangement) is an employer-funded benefit account that your employer owns and manages. Money in an HRA follows your employer's plan rules, and you generally lose access to the account balance if you leave the job.

Both accounts let you pay for qualified medical expenses tax-free, but the rules that govern them are fundamentally different. HSA money stays in the account with no deadline to spend it, and it moves with you if you switch jobs. HRA money follows the plan document your employer creates, which sets the rules for carryover, grace periods, and what happens to the balance when you leave.

Definition and who is eligible for each account

An HSA is a personal savings account designed specifically for people covered by a high deductible health plan (HDHP). You own the account, you control the money, and you decide how and when to spend it. An HRA is a reimbursement account that your employer creates and funds on your behalf. The employer owns the account and sets the rules for how it works.

HSA eligibility

To open an HSA, you must be covered by an HDHP. IRS Publication 969 defines an eligible individual as someone who is covered under a high deductible health plan on the first day of the month (source: IRS Publication 969). You also cannot have other health coverage that disqualifies you, with limited exceptions for dental, vision, and limited-purpose FSA plans. Once you meet these requirements, you choose whether to open an HSA. It is not automatic. You can open an HSA through your employer if they offer one, or you can open an account independently with a bank or financial institution.

HRA eligibility

An HRA is offered entirely at your employer's discretion. Healthcare.gov describes HRAs as "employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year" (source: healthcare.gov glossary). The employer funds and owns the arrangement. Your employer decides whether to offer one, who is eligible, and how much to contribute. You do not choose to open an HRA or decide how much to contribute. You cannot open an HRA on your own. Sometimes the employee can contribute additional funds, depending on the plan design.

How money goes in

Money enters an HSA and HRA through completely different mechanisms. With an HSA, you contribute the money yourself or it comes from your paycheck. With an HRA, only your employer can contribute.

HSA contributions

An HSA can be funded in several ways. If your employer offers an HSA through payroll, money is deducted from your paycheck before taxes, reducing your taxable income. Your employer may also contribute to your HSA as an employee benefit. If you have an individual HSA, you can contribute money directly and claim the contribution as a tax deduction on your tax return. You decide how much to contribute up to the IRS annual limit.

HRA funding

Your employer funds an HRA. The employer allocates a specific amount each year, or sometimes each month, to your HRA account. You do not contribute salary deferrals to an HRA. Some HRA plan designs allow employees to make contributions, but this is entirely controlled by the employer's plan document. The employer decides the amount, the timing, and the rules.

Contribution limits

HSA contributions are limited by the IRS. For 2026, you can contribute up to $4,400 for individual coverage or $8,750 for family coverage. These limits change yearly with inflation. If you are 55 or older, you can contribute an additional $1,000 as a catch-up contribution. HRA contribution limits are determined by your employer's plan document. There is no federal IRS limit on what an employer can contribute to an HRA. Employer contributions do not count against your HSA limit.

How money comes out: card, reimbursement, and who files

You access HSA and HRA money differently. HSA funds are primarily accessed through a debit card or direct withdrawals. HRA funds are typically accessed by requesting reimbursement from your employer.

HSA access methods

Most HSAs issue a debit card that works at pharmacies, doctor offices, and hospitals. You can use the card like a credit card to pay for qualified medical expenses. You can also request checks or transfers to your bank account. Some HSA administrators allow you to pay providers directly. You manage your withdrawals. The HSA administrator does not approve or deny your requests. You are responsible for ensuring that withdrawals are for qualified medical expenses. Keep receipts and records because the IRS may audit HSA withdrawals.

HRA access methods

An HRA typically works through reimbursement. You pay for a qualified medical expense out-of-pocket, then submit a claim or receipt to your employer or administrator. The employer reviews the claim and reimburses you from the HRA account. Some HRAs issue debit cards or direct payment arrangements, but this depends on the employer's plan design. The plan document specifies exactly how employees access the money.

Who files the claim

With an HSA, you file your own claims by withdrawing money when you have a qualified expense. The HSA administrator handles the mechanics but does not review or approve individual withdrawals. With an HRA, your employer or the plan administrator reviews and approves each reimbursement request before paying you. This means an HRA claim goes through a gatekeeper process, while HSA claims are self-directed.

Year-end and job change

HSA and HRA rules diverge sharply at year-end and when you change jobs. These differences directly affect whether you keep your money.

Year-end rules

HSA balances carry forward with no deadline. IRS Publication 969 states that "amounts that remain at the end of the year are generally carried over to the next year" (source: IRS Publication 969). If you do not spend your HSA money in a given year, it stays in the account earning interest or investment growth. FSAs work differently. Unspent FSA money follows a use-it-or-lose-it rule at year end. HRA balances are governed entirely by your employer's plan document. Some HRA plans allow balances to carry over to the next year. Others include a grace period (up to 2.5 months after year-end) to incur expenses using the prior year's funds. Still others set a hard cutoff. You spend the money in the current year or lose access to it. You must read your employer's plan document to know the exact rule.

Job change and portability

If you change jobs, your HSA balance stays yours. You can roll it to a new HSA or keep it with your current provider. You own the account and can access it for qualified medical expenses indefinitely, even if you no longer have HDHP coverage. If you change jobs, you typically lose access to your HRA balance immediately. Because your employer owns the account, the money stays with the employer. Some employer plans allow for limited access after you leave, such as a claims run-out period, but this is rare and depends on the plan document. If your employer closes the plan, you may have a limited window to claim reimbursement for outstanding medical expenses, but you do not take the HRA balance with you.

COBRA and continuation of coverage

If you lose health insurance coverage and elect COBRA continuation coverage, your HSA remains yours and you continue to own and control it. You can still contribute to it if you maintain HDHP coverage. Your HRA is generally not available under COBRA. Once you leave your employer, your HRA account closes, and you lose access to the remaining balance unless your plan document specifically allows otherwise.

HSA vs HRA: Key differences

The fundamental difference is ownership and control. You own your HSA. Your employer owns your HRA. This single fact shapes every other difference between them.

Where Burst fits

Some purchases are only reimbursable with a letter of medical necessity: gym memberships, massage, fitness equipment, sleep and recovery products, and similar. Burst writes the letter and files the claim for $35, refunded if no letter is issued or the claim is denied. See how a letter works.

Frequently asked questions

What is the main difference between an HSA and an HRA?

You own an HSA and keep the money when you change jobs. Your employer owns an HRA, and you generally lose access to the balance when you leave.

Can I have both an HSA and an HRA at the same time?

Yes, if your employer offers both. You can have an HSA through your HDHP and an HRA as a separate employer benefit. The money in each account is kept separate, and the rules for each apply independently.

What happens to my HRA if I change jobs?

Your HRA balance typically stays with your employer when you leave. You lose access to the account unless your employer's plan allows a grace period or claims run-out. Always check your plan document or ask HR.

Do HSA and HRA balances carry over year to year?

HSA balances carry forward with no deadline. HRA balances depend on your employer's plan design. Some plans allow carryover, others include a grace period, and some set a cutoff where you spend the money in the current year or lose access to it.

Is an HRA the same as a health care reimbursement account?

Yes. A health reimbursement arrangement is often called a health care reimbursement account, and it works by reimbursement rather than a card you fund yourself. An HSA is a different structure: you own the account and contribute to it directly, whether or not your employer is involved.

Is an HRA or HSA insurance?

Neither one is insurance. Both are accounts that sit alongside a health plan and help pay for qualified medical expenses. An HSA requires you to be enrolled in an HDHP. An HRA is a separate employer benefit that can pair with any health plan your employer offers.

Can I use an HSA if I do not have HDHP coverage?

You cannot contribute to an HSA without HDHP coverage. However, if you have an existing HSA balance from when you had HDHP coverage, you can continue to withdraw from it for qualified medical expenses even after you lose HDHP coverage.

Do I need to be covered by an HDHP to have an HRA?

No. An HRA is an employer benefit that works independently. You do not need an HDHP to participate in an HRA. Your employer can offer an HRA alongside any health plan.

How do I request a reimbursement from my HRA?

You submit a claim to your employer or plan administrator with proof of the medical expense, usually a receipt or invoice. The administrator reviews the claim to confirm it is for a qualified expense and then reimburses you. The process can take weeks, depending on your employer's procedures.

Can I invest my HSA money?

Many HSA providers allow you to invest your balance in stocks, bonds, or mutual funds after you meet a certain account balance (often $2,000 or more). An HRA typically does not offer investment options.

Keep reading: What's an HSA?, What's an FSA?, What's the Difference Between an HSA and an FSA?, How Can I Reimburse Purchases From My HSA?, and all guides on this topic.

Sources

• IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (HSA eligibility (HDHP coverage requirement), contribution limits, no year-end deadline to spend HSA funds, account ownership and portability)

• HealthCare.gov glossary: Health Reimbursement Arrangement (HRA) (HRA definition, employer-funded and employer-owned structure)

• HealthCare.gov glossary (index) (Cross-reference for HRA and HSA plain-language definitions used throughout the page)