Serving Colorado's Counties

Technical Update vol. 27 no. 45 - FSAs, HRAs, and HSAs 

November 7, 2023

Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs) are tax-advantaged accounts used to pay for qualified medical expenses such as co-pays, prescriptions, dental, and vision costs. Employers can offer any or all of these accounts as a benefit to offset healthcare costs. These accounts use pre-tax dollars and must adhere to specific rules and limits set by the IRS. The table below provides a general overview of how these accounts differ:


Plan Feature 

Flexible Spending Accounts (FSAs) 

Health Reimbursement Arrangements (HRAs)

Health Savings Account (HSAs)
Who creates the account? Employer Employer Employer or individual
Who contributes? Employer and employeeEmployer only Employer and employee
 Pre-tax salary reduction Permitted Not permitted. HRAs are exclusively employer-fundedPermitted subject to maximums
Maximum contribution 
2024 amounts have not been released by the IRS. 2023 maximum is $3,050 for healthcare and limited purpose and $5,000 for dependent care
Set by employer For 2024, maximum contribution is $4,150 (single) / $8,300 (family)
Carry-forward of amounts from year to year
Employer may either allow carryover of up to $610 (the 2024 IRS rollover amount has not been released yet) or offer a 2.5-mth grace period
Plan may cap amount of carryforwardRequired
Portability FSA's are covered under COBRA and can be converted via COBRA onlyNone Individual money is portable and may be rolled into another HSA once in a 12-mth period
High-deductible health Plan (HDHP)Not required; note that having a medical FSA disqualifies an employee from making or receiving HSA fundsNot required Required. For 2024, minimum deductible is $1,600 (single) / $3,200 (family). Preventive care  expenses do not have to be subject to the deductible
Out-pocket-maximum for HDHP N/A N/A For 2024, $8,050 (single) / $16,100 (family)
Reimbursement of health insurance premiumsGenerally, no For an HRA paired with group coverage: certain health and long-term care insurance is reimbursable

For an HRA paired with individual market coverage or Medicare: individual  market premiums or Medicare premiums are reimbursable

For an “excepted benefit” HRA: premiums for excepted benefits or for short-term limited duration  insurance are reimbursable
Certain health and long-term care insurance (including COBRA) premiums while receiving  unemployment compensation, and retiree medical for individuals 65 or over (but not Medigap plans)
Distribution for non-medical expenses (Including cash-outs)Not allowed Not allowed Subject to tax and 20% penalty, with certain exceptions

What this Means for Counties

Each type of account offers benefits depending on your health insurance needs. Understanding the differences can help determine which account or combination of accounts is the best fit for your situation. For more information, contact CTSI at (303) 861-0507.

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Read More