What's the Difference Between an HSA and an HRA?


Kurt Stammberger


An HSA - a "healthcare savings account" - is medical and retirement planning savings account that can be used on a tax-advantaged basis. HSAs were created in Medicare Modernization legislation passed in December 2003. To be eligible for an HSA, a consumer must be covered by a high deductible health plan (HDHP).
By contrast, an HRA - a "healthcare reimbursement account" is an account maintained by an employer to be used to reimburse employees for qualified medical expenses. HSA accounts must be funded before they're used, but HRAs don't need to be. Using an HRA, an employer can simply pay the medical expenses as they're incurred.
HSA accounts belong to the individual employees and are fully portable; in other words, employees can take the accounts with them if they leave an employer. HRA accounts belong to the employer. Each employee gets an annual allocation of dollars and unused funds roll over from year to year as long as the employee continues in good standing. Typically, an employee forfeits the money in an HRA account if they leave the employer.
An HSA can be funded by either the employer or the employee (or, often: both). An HRA may only be funded by the employer.
All qualified contributions into an HSA are tax-free. If the employer contributes, then such contributions aren't treated as part of the employee's income, and are therefore tax-advantaged. If the employees makes contributions, these can be deducted from the employee's income when tax returns are filed.
Here's the best part: not only are deposits into HSAs tax-free... so are withdrawals. Any distribution from an HSA for qualified medical expenses is tax-free. HSAs are typically managed much like an IRA: that is, there are a variety of investment vehicles that the consumer can put his or her money into, so that it might compound and grow while it's waiting to be used for medical needs. The specific investments available to a consumer vary depending on the company offering the HSA. As we said before, like an IRA a HSA belongs to the individual and is portable.
Consumers can make withdrawals from HSAs for non-medical purposes after the age of 65 but the withdrawals (aka "distributions") are treated as income and taxed accordingly. Distributions for non-medical purposes made before the age of 65 are treated as an early distribution and subject to an early withdrawal penalty of 10% plus regular income tax.


Kurt Stammberger is VP, Marketing at Healthia Inc. Healthia provides you comprehensive information to help you compare health insurance plans for Groups, Individuals, Families and Employees.




Recorvery Rebate Credit
Mileage Deductions
Car Donation Deductions
Bad Debt Right Off
Hybrid Cars Deductions
Tax Cash Today at Western Union
CPA Moms - Services Offered
Tax Preparation
Electronic Filing
Enrolled Agents
Tax Moms
Recovery Rebate Credit
CPA Moms
Representation before IRS
Non Profit Tax Services
CPA Loan Letter
$7500 Downpayment for your Home
Medical Home Pages
Medical News
List of Medical Related Articles
Additional Resources
Want to Join the Moms?
Questions for CPA Moms?

What is a CPA Mom?

CPA Moms is trade name given to Accounting and Tax Professionals who chose to work in an “relaxed” environment. 

Some work from home, other work from personal offices.   Not all are moms, there are some dads.  Each CPA Mom is independent and licensed by their state CPA agency.  


Being in a relaxed environment has many advantages.  Lower overhead, faster response time, more availability etc.
To be a member of CPA Moms, the CPA must ALWAYS be in good standing with their state licensing CPA agency, experienced, and must demonstrate  a high level of ethics, professionalism and proficiency.  

Tax Net Inc, the parent company of the CPA Moms, has developed marketing and on line systems to help qualified CPA’s work from their relaxed environment and offer better service at a lower price to the consumer.  Since the CPA Moms do taxes and accounting of all complexities, there is always a CPA Mom available for every level of work.  

For reliability and dependability of CPA Moms organization click on the Better Business Bureau icon below.











Privacy Policy  .....About Us  ......Disclaimer ..........Copywrited 2005  - 2006 & Sponsored by Tax Net Inc