HSA, FSA, HRA and More: Your Health Savings Options at a Glance
Health care costs money. But there are special accounts that can help you pay for it, often with tax breaks. The hard part is knowing which ones you can use. Here's a simple tour of each one.
HSA: Health Savings Account
An HSA is a savings account for health costs. You can only open one if you have an HSA-friendly high deductible health plan (HDHP). Money goes in tax-free, grows tax-free and comes out tax-free for medical costs. The money is yours forever, even if you change jobs.
FSA: Flexible Spending Account
An FSA is an account you get through your job. You choose how much to put in for the year, and it comes out of your paycheck before taxes. The catch? You usually have to use most of it by the end of the year, or you lose it.
Limited Purpose FSA
This is a special FSA that only pays for dental and vision care. Why does it exist? Because you can use it together with an HSA. A regular FSA blocks you from adding to an HSA. A Limited Purpose FSA doesn't.
HRA: Health Reimbursement Arrangement
An HRA is money your employer sets aside to pay you back for health costs. Only your employer puts money in. Your employer also sets the rules about what it covers.
ABLE Account
An ABLE account is a savings account for people whose disability began before age 46. It can pay for health care and many other living costs. It usually doesn't affect benefits like Medicaid.
High-Yield Savings Account
This is a regular savings account that pays more interest than most. It has no special tax breaks. But anyone can open one, and you can use the money for anything. If you can't get any of the accounts above, this is your backup plan.
Side-by-side
HSA
Who can get it: People with an HSA-friendly HDHP
Who adds money: You, your employer, anyone
Do you keep it if you change jobs? Yes
Tax break: Yes (3 of them)
FSA
Who can get it: Workers whose employer offers it
Who adds money: You (sometimes your employer)
Do you keep it if you change jobs? Usually no
Tax break: Yes
Limited Purpose FSA
Who can get it: Workers with an HSA whose employer offers it
Who adds money: You (sometimes your employer)
Do you keep it if you change jobs? Usually no
Tax break: Yes
HRA
Who can get it: Workers whose employer offers it
Who adds money: Only your employer
Do you keep it if you change jobs? Usually no
Tax break: Yes
ABLE
Who can get it: People whose disability began before 46
Who adds money: You, family, friends
Do you keep it if you change jobs? Yes
Tax break: Yes
High-yield savings
Who can get it: Anyone
Who adds money: You
Do you keep it if you change jobs? Yes
Tax break: No
Which ones can you use?
Start with two questions:
What health plan do you have? If it's an HSA-friendly HDHP, an HSA is likely your best tool.
What does your employer offer? Check for an FSA, a Limited Purpose FSA or an HRA.
You might be able to use more than one. And if none of them fit, a high-yield savings account still helps you plan ahead.
Key takeaways
HSAs, FSAs and HRAs help you pay for care, usually with tax breaks.
Your health plan and your employer decide which ones you can use.
Anyone can use a high-yield savings account as a backup.
