HSA vs. FSA vs. HRA : What’s the Difference?

When shopping for individual health insurance—whether through the Marketplace, a private exchange, or directly from a carrier—you’ll likely come across three acronyms that sound confusingly similar: HRA, HSA, and FSA.

These health-related accounts can help reduce your out-of-pocket medical expenses and save you money on taxes. But they work very differently—and not all are available to everyone. If you’re self-employed, freelance, or buying your own health insurance, here’s what you need to know.

What Is an HSA?

Health Savings Account (HSA)
An HSA is a tax-advantaged savings account that you own. To qualify, you must be enrolled in a high-deductible health plan (HDHP). These plans are often chosen on the individual market for their lower monthly premiums.

Key benefits of an HSA:

  • Tax-deductible contributions

  • Tax-free growth on your balance

  • Tax-free withdrawals for qualified medical expenses

  • Funds never expire

  • You can invest the balance (once it hits a threshold)

Why it’s useful:
An HSA is ideal if you’re healthy, want lower monthly premiums, and are able to save for future medical expenses—or even retirement. It’s one of the most flexible and tax-efficient health tools available to individuals.

💡 Bonus: You can contribute even if you’re self-employed.

What Is an FSA?

Flexible Spending Account (FSA)

FSAs are employer-established accounts, usually tied to a traditional group health plan. If you’re buying individual coverage, you typically can’t set up an FSA on your own.

However, if you work for an employer (even part-time) that offers benefits, you may still be eligible for an FSA—even while carrying your own individual policy.

Key features:

  • Funded with pre-tax dollars

  • Covers common expenses like copays, prescriptions, glasses, and more

  • “Use it or lose it” by year-end (unless your plan has a short grace period or carryover option)

Why it’s useful:
If offered through your job, an FSA helps lower your taxable income and makes routine medical spending more affordable. Just be sure to use the funds before they expire.

What Is an HRA?

Health Reimbursement Arrangement (HRA)
An HRA is not something you set up yourself—it’s offered and funded by an employer. If you’re self-employed or purchasing individual insurance, you’ll only encounter HRAs if:

  • You’re a W-2 employee offered one through your job.

  • You’re working for a spouse’s business (in some cases, you can qualify via spousal employment).

Why it’s useful:
HRAs help cover health insurance premiums or qualified medical expenses without you having to contribute. If your employer offers one, take advantage of it—it’s free money toward your health.

Choosing the Right Option for You

If you’re buying your own health insurance, an HSA is typically the most accessible and flexible option, provided you’re enrolled in an HDHP. It can help you build a cushion for future health expenses while giving you significant tax advantages today.

If you’re covered under an employer’s plan—even if it’s part-time work—ask about FSA availability and how it could complement your personal coverage.

Final Thoughts

Understanding how these accounts work is a powerful way to take control of your healthcare spending. The right combination of a well-chosen individual health plan and a health savings vehicle can improve both your financial wellness and your peace of mind.

Have questions about options with your individual insurance plan? We are here to help!