Difference between HRA and HSA (With Table)

As human beings, we are bound to face some risks in the line of our living. This calls for insurance in order for the risks to be compensated in case something happens.

There are many types of cover in the market which ensures that someone’s health is covered together with his or her spouse and children.

HRA and HSA are some of the covers that are found in the market. People use the words interchangeably but the two works are completely different.

Both are agreements that are owned by employers. HRA is Health Reimbursement Arrangement while HSA is Health Savings Account.

So, what is the main difference between HRA and HSA? HRA is an account set up and is funded by your employer to help pay for eligible health care expenses while HSA  is a saving account that you own to help pay for qualified health care expenses.

For more information on the difference between HRA and HSA in tabular form, continue reading the article. You will also get to learn of the similarities.

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Comparison Table (HRA vs HSA)

Basic Terms HRA HSA
Definition It is an account set up and is funded by your employer to help pay for eligible health care expenses. It is an account that you own to help pay for qualified health care expenses.
The owner of the account The employer owns the account. You own the account.
Eligible people All employees are enrolled in the plan as set by the employer. Anyone in a qualified High Deductible Health Plan.
Contribution The only employer is the one allowed to contribute. Anyone is allowed to contribute.
Limited amount It depends on the employer’s rules. It has an IRS limit to be put in the account per year.
Balance in the account The employer may not allow or may limit the amount to be carried over to the next year in the account. The amount may stay in the account up to the time you would want to use it.
Portability It cannot be portable. It is portable.
Interest earned No interest is earned on the money in the account. Interest is earned on the money in the account.

What is HRA?

HRA is a health benefit scheme where an account is set up and is funded by the employer to pay for health care expenses.

The scheme is good for those whose High Deductible Health Plan does not work for their needs. It is entirely funded by an employer.

It covers a wide range of medical insurance some of which cannot be covered by the regular insurance cover.

In case you choose to leave the job, then your HRA does not follow you. It is only specific at certain working stations.

The employer needs to make the employees set annual contribution limit, set rules and regulations behind the plan, and reimbursements you make as an employer are tax-deductible.

The employer is the only person allowed to contribute and may decide on the limited amount to be contributed per year.

The account does not earn interest on the money put there. The employee is not allowed to withdraw the amount of money from the account.

What is HSA?

HSA is a health benefit scheme where you set an account owned by yourself to help pay for qualified health care expenses.

The account is owned by you and you are able to deposit any amount at any time and also withdraw the money at any time.

It is owned by people who have a High Deductible Health plan. The money rolls over into the following year in case you did not use the previous year.

Anyone is allowed to contribute the money. The money put on the account earns interest hence the owner of the account ought to benefit at the end.

However, one needs to consider his or her health records in the past for him or her to take the HSA scheme. If one’s previous record is not good health-wise, then he or she needs to consider a cheaper scheme.

In case of job change, the employee can still continue with the HSA account hence it is portable from one working station to another.

Main Differences between HRA and HAS

  1. HRA is funded by the employer while HSA is funded by the owner.
  2. HRA account does not earn interest on money on the account while the HSA account earns interest on the money on the account.
  3. HRA account is not portable while the HSA account is portable.
  4. In HRA the employer decides who is eligible for the plan while HSA is eligible to anyone who has a High Deductible Health Plan.
  5. HRA account, the employer may set a limit of rollover amount in the account to the next year while HSA unused contributions are rolled over to the next year.
  6. HRA does not allow withdrawals while HSA allows withdrawals although it includes a 10% penalty and tax withheld.
  7. In HRA, the employer may change the amount of contribution under certain circumstances while in HSA employees can change the contribution amount during the year.

Similarities between HRA and HAS

  1. Both cover health.
  2. Both need contributions.
  3. Both are owned by employers.


HRA and HSA are plans meant to cover the health of employees in a working station. The employees are able to take care of the medical expenses in case they fall sick.

However, the two are different from each other although they have been used interchangeably by people. The main difference between the two is that HRA is set up and funded by the employer while HSA is set up and funded by the employee.

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