What's the Difference Between a Health Reimbursement Account and an HSA?

A Health Reimbursement Account (HRA) and a Health Savings Account (HSA) are both ways to pay for medical expenses with pre-tax dollars, but they work very differently. An HRA is funded entirely by your employer — you don't contribute to it yourself — and it reimburses you for qualified medical expenses up to a set annual limit. An HSA is funded by you (and possibly your employer), requires you to be enrolled in a high-deductible health plan, and the money is yours to keep even if you change jobs. HRAs are employer-controlled and typically don't roll over or travel with you when you leave a job, though some HRA types do allow limited rollover. HSA funds roll over indefinitely, can be invested, and can even be used for non-medical expenses after age 65 (though those withdrawals are taxed as income). For employees who have a choice, the HSA often offers more flexibility and long-term value.