HSA
A Health Savings Account is a type of personal savings account you can set up to pay certain health care costs. An HSA allows you to put money away and withdraw it tax free, as long as you use it for qualified medical expenses, like deductibles, copayments, coinsurance, and more.
HRA
A Health Reimbursement Arrangement is a group health plan funded by the employer that reimburses employees for their qualified medical expenses. These reimbursements are tax-free and typically have a fixed dollar amount per year. There are some types of HRA plans that can also reimburse employees for their insurance premiums. When employers contribute to this type of plan for their employees, they are allowed to claim a tax deduction for the reimbursement that they offer through these plans.
FSA
A Flexible Spending Account is an employer-sponsored healthcare benefit that allows employees to set aside tax-free dollars annually to cover the cost of qualified medical expenses. It’s a lot like a savings account but used for qualified health-related costs. FSAs work on an annual plan year basis and are funded through regular payroll deductions. These funds are subject to a use-it-or-lose-it rule, which means that any funds that are unspent by the end of each plan year are potentially forfeited to the employee’s employer.