What are the differences between HSA, HRA and FSA?

Who is this for?

Michigan Health Insurance – Customer Service – Health Spending Accounts

If you’re interested in health spending accounts, this information can help you learn the differences between these three kinds of accounts.

Health spending accounts are used to pay for your medical expenses. They’re part of what’s called consumer-directed health care.

“Consumer directed” means you manage more of the money you spend on health care costs.

Types of health spending accounts

Health savings account, or HSA

A health savings account is like a 401(k) retirement account, but it's for medical expenses. You can only have an HSA if you enroll in an HSA-compatible health plan.

Health reimbursement arrangement, or HRA

A health reimbursement arrangement is a benefit fund set up by your employer. They contribute a certain amount of money each year for you to use for medical expenses not covered by your health plan, such as deductibles or coinsurance. Only your employer can fund an HRA.

Flexible spending account, or FSA

A flexible spending account is set up by your employer. They own the account, but you get to decide which qualified medical expenses to pay for with your FSA. What makes it flexible? It works with most of our PPO employer-sponsored health plans. Blue Care Network does not offer HMO FSA plans.

HSA vs. HRA vs. FSA: how they're different

Let's start with what they have in common. Money is deposited in these accounts tax free, and is taken out tax free or tax-deductible. You can use it to pay for qualified medical expenses, such as deductibles and copays. A debit card may also be available depending on your plan.

Where they differ is the kind of health plan they work with, who owns the account, who controls it and who can put money into it.

View the chart below for more comparisons.

Account Features HSA
You can use it to pay your deductibles or copays.
You can use the money in the account before it's fully funded.    
You own the account.
Your employer owns the account.  
Money put into the account that’s already been taxed (for example, money that was a gift) is tax deductible.
It could be deposited as an untaxed payroll deduction or it could also be after tax.
You can invest the money.
A debit card may be available, but it won't be for all plans.

Plans you can combine with health spending accounts

You can pair any of these individual or family plans with our HSA:

Check with your employer to find out if you can pair your plan with our HRAs or FSAs. If you have HMO coverage from Blue Care Network, you're not eligible for an FSA.

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