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Plan healthcare savings · Lesson 7 of 17

HSA, FSA, and HRA: what is the difference?

2 min read

The short answer

All three help pay medical costs with money that is not taxed by the federal government. An HSA is yours to keep and needs a qualifying high-deductible plan. A healthcare FSA comes through work, and unused money may be lost. An HRA is funded only by your employer.

Key takeaways

  • HSA money stays yours, even if you change jobs or plans.
  • Healthcare FSA money is mostly "use it or lose it," though some plans allow a small carryover or extra time.
  • A dependent-care FSA is for child or adult day care, not medical bills.

Health savings account (HSA)

An HSA is a savings account you own. To put money in, you must be covered by an HSA-qualified high-deductible health plan and meet other rules. For example, you cannot contribute once you are enrolled in Medicare.[1]

For 2026, the federal limit is $4,400 for self-only coverage and $8,750 for family coverage. People 55 or older can add $1,000.[2] Money you and your employer put in both count toward the limit.[1] Unused money rolls over every year.

Starting in 2026, some bronze and catastrophic Marketplace plans can count as HSA-qualified.[3]

Healthcare flexible spending account (FSA)

A healthcare FSA is offered by an employer. You choose an amount for the plan year, and it comes out of your pay before federal tax. For plan years starting in 2026, the limit is $3,400.[4] Your employer may set a lower limit. Unused money is generally lost, unless your plan offers a carryover or a grace period.[1]

A limited-purpose FSA covers mainly dental and vision costs. It can be used alongside an HSA.[1]

Health reimbursement arrangement (HRA)

An HRA is funded only by your employer. The employer decides what it covers and whether unused money carries over. You usually cannot take it with you when you leave.

Dependent-care FSA

A dependent-care FSA pays for care of a child or dependent adult so you can work. It does not pay medical bills. For 2026, the household limit is $7,500.[4]

What can be different for you

State tax rules can differ from federal rules. For example, California does not give HSA contributions the same tax break as federal law.[5] Employers choose many FSA and HRA features. Medicare enrollment stops new HSA contributions, but you can still spend HSA money you already have.[1]

What you can do next

  1. Check which account types your employer or plan offers.
  2. Confirm whether your plan is HSA-qualified before opening or adding to an HSA.
  3. Use the FSA or HSA planner to think through an amount.
More detail (optional)

Can I have more than one?

Usually you cannot contribute to an HSA if you also have a general healthcare FSA or HRA that pays medical costs before the deductible. A limited-purpose FSA or HRA is the common exception.[1]

Paying for qualified expenses

Each account pays for qualified medical expenses. HSA money spent on other things is taxed and may have a penalty. Keep receipts in case you need to show what the money paid for.[1]

Words in this lesson

HSA (health savings account)
A savings account you own for medical costs, available with an HSA-qualified high-deductible plan. Money rolls over each year.
Healthcare FSA (flexible spending account)
A work account where you set aside pay before federal tax for medical costs. Unused money is generally lost unless your plan offers a carryover or grace period.
Limited-purpose FSA
An FSA that pays mainly for dental and vision costs. It can be used alongside an HSA.
HRA (health reimbursement arrangement)
An account funded only by your employer to pay certain medical costs. The employer sets its rules.
Dependent-care FSA
A work account for child care or adult day care costs so you can work. It does not pay medical bills.
High-deductible health plan (HDHP)
A health plan that meets federal deductible and out-of-pocket rules, which lets you contribute to an HSA if you meet other requirements.
Qualified medical expense
A cost that tax rules allow HSA, FSA, or HRA money to pay, such as many doctor visits, prescriptions, and dental care.

Related

Where can I go for help?

Free help is often close by: the member services number on your insurance card, the billing office for your provider, your state insurance department, and nonprofit patient advocates.

Who can help, and what each one does

Prefer personal support? An independent patient advocate may help. Learn about Navigator & request beta access (Navigator is in development.)

See the quick-answer view

This is general education. For decisions about your own plan, taxes, or legal rights, check your plan documents or a qualified professional.

Sources

  1. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans Internal Revenue Service. Applies to: 2025 tax year edition (rules described still used for 2026 where unchanged; 2026 edition not yet checked). Published or updated: Unknown. Retrieved: November 6, 2026.
  2. Rev. Proc. 2025-19 (2026 HSA, HDHP and excepted-benefit HRA amounts) Internal Revenue Service. Applies to: 2026. Published or updated: Unknown. Retrieved: October 14, 2026.
  3. Notice 2026-5: HSA changes under Public Law 119-21 Internal Revenue Service. Applies to: 2026. Published or updated: Unknown. Retrieved: November 6, 2026.
  4. Message Board: 2026 FSA contribution limits FSAFEDS (U.S. Office of Personnel Management program). Applies to: 2026. Published or updated: Unknown. Retrieved: October 14, 2026.
  5. California treatment of health savings accounts California Franchise Tax Board. Applies to: unknown. Published or updated: Unknown. Retrieved: .
  6. Rev. Proc. 2026-24 (2027 HSA, HDHP, excepted-benefit HRA and DPCSA amounts) Internal Revenue Service. Applies to: 2027. Published or updated: Unknown. Retrieved: October 14, 2026.