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Comparing HSAs to FSAs and HRAs

Like HSAs, Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs) are each tax-advantaged medical savings accounts. Here’s how HSAs stack up with them:

Are contributions to the account pre-tax or tax-deductible?YesYesYes
Are qualified medical withdrawals tax-deductible?YesYesYes
Can you take the account with you when leaving a job?YesNoNo
Are there limits to the funds you can carry over to the following tax year?NoYes, requires employer approvalYes, may be imposed by employer
Who can contribute to the account?AnyoneTypically, youYour employer
Does money in the account earn interest?YesNoNo
Can funds in the account be invested?YesNoNo
Does the account require being enrolled in a high-deductible health plan (HDHP)?YesNoNo
Can you make non-qualified withdrawals?Yes, with a penaltyNoNo
Can funds be used for Medicare premiums?YesNoNo
Can funds be used for long-term care premiums?YesNoNo
Are rollovers from previous HSAs/FSAs/HRAs/ permitted?YesNoNo
What happens to the account at the accountholder's death?Transfers to designated beneficiary or estateOnly amounts for previously incurred medical expenses may be distributedCan only be used for medical expenses of surviving spouse or tax dependents

Source: Groom Law Group
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Author: James Denison