Key takeaways 

• HSAs, FSAs, and HRAs can reduce taxable income while helping households plan for immediate and future healthcare costs.
• HSAs stay with the owner and can double as long-term investment accounts.
• FSAs  may be better suited for predictable costs while HRAs offer flexible, employer-funded coverage.

Healthcare accounts aren’t just side perks anymore — they’re becoming central to how households manage both today’s doctor bills and tomorrow’s retirement costs. With 2025 contribution limits rising, HSAs, FSAs, and HRAs are offering more ways to save money on care while reducing taxes.

Tax advantage health accounts are no longer “nice-to-have” benefits. They've become core tools for managing everyday care while helping to build future savings. Health savings accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement arrangements (HRAs) each follow different rules, but are all designed to stretch household healthcare dollars further.

The health account numbers are climbing fast. For 2025, HSA contribution limits have risen to $4,300 for self-only coverage and $8,550 for families, with an extra $1,000 allowed for people 55 and older. FSAs are capped at $3,300, with a carryover of up to $660 if the plan offers it. Excepted benefit HRAs are often used to cover premiums or targeted expenses, and cap at $2,150 dollars per year.¹

With several savings options for employees, companies are leaning into consumer-directed healthcare (CDH). More than half (55%) of companies offering healthcare plans offer a CDH, shifting more choice and responsibility to workers.² The result? Accounts that may have once seemed like add-ons at one point are now standard pieces of compensation and healthcare options.

Read more: Gen X strikes a balance between retirement and caring for aging parents

Health savings accounts

HSAs stand out: they require enrollment in a high-deductible health (HDH) plan. High deductibles are defined by the IRS as consisting of a minimum $1,650 deductible for individuals, or $3,300 for families.³ In return, they deliver a potential triple tax advantage: Contributions may lower taxable income, account balances can grow tax free, and withdrawals for qualified expenses are federal income tax-free if used to pay for qualified medical expenses.^*

Portability can make them even stronger. Funds roll over forever and stay with the account holder through job changes or retirement. That's why some account holders treat HSAs as a growing retirement strategy. HSA investing is increasing, especially among younger workers and households that opt to pay medical costs out of pocket.⁴ For those savers, HSAs may serve as both a healthcare cushion as well as a potential long-term growth engine for health costs in retirement.

Health reimbursement arrangements: The employers’ contribution

HRAs fund the opposite way. Employees don't contribute — employers do. Instead, employers own the account, deciding what qualifies and setting rollover rules.5 Like FSAs, HRAs aren't portable. The balance stays behind if the employee moves on.⁶

HRAs are often used to reimburse premiums, soften deductibles, or cover categories of care.⁷ Smaller employers may prefer an HRA to help subsidize healthcare costs. For example, qualified small employer HRAs (QSEHRAs) can help employees buy individual coverage.8 Larger employers often use HRAs to make high-deductible plans more appealing.⁹

Read more: Understanding the costs of a healthy retirement

How these accounts compare

Each of these accounts offer different ways to help pay for health costs. Some focus on near-term expenses, while others are more flexible for the long-term. Here’s how they stack up:

• Funding: HSAs and FSAs can receive employee and employer dollars, but HRAs are employer-only.
• Limits: HSAs ($4,300 for individuals/$8,550 for families) have higher caps than FSAs. HRAs vary by employer.
• Rollovers: HSAs roll over indefinitely. FSAs carry over only $660 or a short grace period. HRAs depend on employer policy.
• Portability: HSAs move with the account holder, but FSAs and HRAs don't.
• Best use cases: HSAs for long term savings and investing, FSAs for predictable annual costs, and HRAs for employer-paid coverage.

These accounts can sometimes work in parallel, depending on how the employer designed the plan. An FSA could help cover predictable yearly expenses, such as prescriptions. An HSA can potentially accumulate assets across decades when paired with a high-deductible plan. HRAs vary by employer, but can often reimburse specific costs like deductibles and premiums. 

Balancing costs and expenses

As health care costs continue to rise, CDHs may become even more important in balancing current expenses with tomorrow's retirement readiness. HSAs, FSAs, and HRAs all aim to ease the burden of healthcare costs in different ways. HSAs combine tax advantages with long-term growth potential. FSAs create opportunities to budget for annual healthcare needs. And HRAs give employers an opportunity to offset healthcare costs for their workforce. Together, they give workers and families more tools to manage healthcare now, while preparing for what lies ahead.

HSAs, FSAs, and HRAs aren't just acronyms in a benefits booklet, they're also financial tools with a mix of short- and long-term healthcare advantages.