FSA, HSA, and HRA: What’s the Difference and Which One is Right for Your Employees?
Spending accounts can do more than reduce taxes. When chosen well, they support employee wellness, retention, and financial peace of mind. But for many employers, these acronyms blur together. And managing them? That’s another story.
Let’s break down the differences between FSA, HSA, and HRA and how Helix makes it easier to offer and administer the right mix.
What Is an FSA?
A Flexible Spending Account (FSA) allows employees to set aside pre-tax dollars for eligible healthcare expenses. These accounts are funded by the employee through payroll deductions. Employers may choose to contribute, but they are not required to.
Key facts:
Available to employees regardless of health plan
Use-it-or-lose-it rule may apply (though some plans offer limited rollover)
Funds are available upfront at the start of the plan year
Covers eligible medical, dental, and vision expenses. Dependent Care FSAs can also be offered for eligible dependent expenses.
FSAs offer solid tax advantages for both employer and employee, but they require planning since unused funds can expire.
What Is an HSA?
A Health Savings Account (HSA) is a tax-advantaged account that helps employees save and pay for qualified medical expenses. To contribute to an HSA, an employee must be enrolled in a HSA-qualified High Deductible Health Plan (HDHP). Not all HDHPs meet the federal requirements for HSA eligibility, so it's important to confirm plan compatibility before offering contributions.
Key facts:
Only available with enrollment in a qualified HDHP
Employee-owned and fully portable
Contributions are tax-deductible
Investments within the account can grow tax-free
Withdrawals for qualified medical expenses are also tax-free
This triple tax advantage makes HSAs a powerful tool for short-term spending and long-term healthcare planning. Funds roll over each year, and unused balances can be invested to build future value.
What Is an HRA?
A Health Reimbursement Arrangement (HRA) is funded solely by the employer. Employees use it to get reimbursed for qualifying medical expenses and sometimes premiums, depending on the type of HRA.
Key facts:
Funded and owned by the employer
No employee contributions
Flexible design options (QSEHRA, ICHRA, traditional HRA)
Unused funds may carry over, depending on plan rules
Reimbursements are tax-free
HRAs offer employers more control over plan design. They work well for small businesses and companies seeking to contain health plan costs.
How Are These Accounts Different?
Why the Right Mix Matters
Each account type serves a different need. Offering the right combination can improve employee satisfaction and promote smarter healthcare spending. Younger employees may prefer HSAs. Families may lean toward FSAs. Some workers might need employer-funded help through an HRA.
When employees understand their options and can actually use their benefits, they stay engaged. They appreciate the flexibility. And they’re more likely to stay.
How Helix Makes It Simple
Managing reimbursement accounts across multiple plan types can get messy. Helix provides a centralized platform to manage FSA, HSA, and HRA programs in one place. We streamline:
Claims processing
Eligibility tracking
Employer contributions
Participant education and support
Compliance with IRS rules and annual limits
Our team helps you stay organized while offering your employees a smoother, more informed experience.
Time to Make It Easier
If you're offering FSA, HSA, or HRA options or thinking about it the setup matters just as much as the benefit itself. Let us help you get it right.
Contact Helix Benefit Solutions today to simplify account administration and give your employees more of what works.
Helix Benefit Solutions offers expert support in flexible spending account administration (FSA), health savings account administration (HSA), and health reimbursement arrangement administration (HRA). We combine advanced platforms with real human support to help you streamline benefits and stay compliant. Ask us about our full suite of benefits administration services and compliance solutions.