HSA vs. HRA: Making the Right Choice for Your Business in 2025

Balancing cost control with meaningful health benefits is no small feat—especially in today’s complex healthcare environment. For business owners and HR teams, two standout tools can help ease that burden: Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs). While both offer valuable tax advantages and help employees manage healthcare costs, they work in very different ways.

If you're deciding which one fits your team best in 2025, here's a clear, practical breakdown.

What Is an HSA?

A Health Savings Account (HSA) is a personal, employee-owned savings account used to pay for qualified medical expenses. To qualify, the employee must be enrolled in a High Deductible Health Plan (HDHP).

Why HSAs Are a Smart Option:

• Triple Tax Advantage: Contributions are tax-deductible, the account grows tax-free, and withdrawals for qualified expenses are also tax-free.

• Employee-Owned: The account belongs to the employee—it goes with them if they change jobs or retire.

• Year-to-Year Flexibility: Unused funds roll over annually.

• Long-Term Growth: Some HSAs allow funds to be invested, building savings for future healthcare needs.

2025 Contribution Limits:

• $4,300 for individual coverage

• $8,550 for family coverage

• Additional $1,000 catch-up contribution for individuals age 55 and older

HSAs are a great fit for employees looking to save for future medical costs—even into retirement.

What Is an HRA?

A Health Reimbursement Arrangement (HRA) is an employer-funded benefit that reimburses employees for out-of-pocket medical expenses. Unlike an HSA, the funds are owned and managed by the employer.

Why HRAs Make Sense:

• Employer-Funded: Only the employer contributes, giving full control over annual limits.

• Customizable: Employers decide what types of expenses are covered and whether funds can roll over.

• Tax-Free Reimbursements: Employees are reimbursed tax-free for eligible healthcare expenses.

• Non-Portable: If an employee leaves, the unused funds typically stay with the employer.

2025 HRA Contribution Limits (Based on Type):

• Excepted Benefit HRA: Up to $2,150

• QSEHRA: Up to $6,350 individual / $12,800 family

• ICHRA: No federal cap; the employer defines the allowance

HRAs give employers more flexibility and are especially useful when HDHPs aren't the right fit for the workforce.

HSA vs. HRA: A Quick Comparison

Feature	HSA	HRA
Who Owns It	Employee	Employer
Who Can Contribute	Employee, Employer, or Both	Employer Only
Portability	Yes	No
Rollover	Yes	Employer Decides
Tax Advantages	Triple Tax Benefit	Tax-Free Reimbursements
Growth Options	Yes, if investments allowed	No
Eligibility	Must have HDHP	Varies by HRA Type

Which Option Is Best for Your Business?

It depends on your goals and the needs of your team:

• Go with an HSA if you're offering an HDHP and want to help employees build long-term health savings.

• Choose an HRA if you prefer more control over healthcare spending and flexibility without requiring an HDHP.

• Consider offering both if you want to provide layered support that meets a range of employee needs.

Ready to Take the Next Step?

Choosing between an HSA and an HRA isn’t just a policy decision—it’s a strategic move that can shape how your employees experience healthcare benefits.

If you're ready to build a smarter, more adaptable benefits package, call 631-385-9602 or reach out via our contact page. Susan Wiener Enterprises is here to help you find the balance between cost savings and employee care.