Have you ever looked at all the options with initials (FSA, HSÅ, HRA) in your benefits enrollment package and felt like you were trying to solve a puzzle? You’re not alone. These accounts that are set up to save you money can be a little confusing at first – especially if you’re enrolled in more than one. So, let’s clear up a frequently asked question: Can you mix and match tax-advantage health accounts?
First, let’s explain what an HRA is. A Health Reimbursement Arrangement (HRA) is an employer-funded health benefit plan that reimburses employees for qualified medical expenses like premiums, co-pays, and other healthcare services. It’s kind of like your employer saying, "Here's some money to help with medical expenses, and you get to use it tax-free for qualified medical costs.” Not a bad deal, right?
Now, let’s explore the possibilities of combining an HRA with an FSA or HSA.
FSAs and HRAs
Good news! An HRA can be used in tandem with a general medical flexible spending account (FSA). Think of this like having two debit cards for healthcare. You just need to know which one to swipe first. Your employer typically sets up a "who pays first" system. Usually, you'll tap into your FSA first (since it's "use it or lose it" money), then dip into your HRA.
HRAs can also be used with limited care FSAs (LCFSAs) over the course of a plan year. This is more good news since LCFSAs are limited to dental and vision expenses only. With this combination, you can use your HRA to cover many of the qualifying medical expenses that a general medical FSA would cover.
HSAs and HRAs
The relationship between an HRA and an HSA is more complicated than an HRA and FSA. Having both an HRA and HSA usually doesn't work - it's often one or the other. But, there are some exceptions.
If you participate in an HRA, you are no longer eligible to contribute to your HSA. But, if your employer offers an HRA that only covers dental, and vision expenses, you can participate in an HRA and contribute to an HSA. It’s like having separate wallets for different expenses.
Your employer may also offer a different HSA-compatible HRA that doesn't start working until you've met the minimum deductible required under your HSA. This is kind of like a backup savings account that activates when you need it most.
Finally, if you carry an HSA but do not make contributions, that doesn't change your HRA eligibility. Remember, FSA and HRA status affect HSA eligibility, not the other way around.
When in doubt, ask
So, the short answer about whether you can combine your HRA with other accounts is a “yes, but…” The devil is in the details. The key is understanding your specific plans and how they work together.
Want to learn more? Your HR department or benefits administrator can help you understand your options. Healthcare benefits are rarely one-size-fits-all. And these plans are designed to help you save money.
For more information about these accounts, visit our FSA Learning Center.
—
Thank you for visiting the FSA Store Learning Center™. Don’t forget to follow us for more helpful tips on Facebook, Instagram, and X (formerly Twitter).
