People compare HRAs and HSAs as if they were two flavors of the same product. They are not. One is an employer’s promise to reimburse you, the other is your own bank account. Once you see it that way, every other difference (portability, contribution limits, what happens at year end) follows from that single fact.
The rules and dollar figures below come from IRS publications and revenue procedures, checked on September 5, 2026. Amounts are indexed annually, so the tax year attached to each number matters. This is a summary of published rules, not tax advice for a specific return.
What an HRA Is
A health reimbursement arrangement is an employer-established benefit that pays you back, tax free, for qualified medical expenses up to a dollar amount the employer sets. Publication 969 sets out three defining constraints.
It must be funded solely by the employer. Contributions cannot come through a voluntary salary reduction, which is what separates an HRA from a health FSA. You cannot add your own money.
There is no statutory contribution limit on a standard HRA. Publication 969 says there is no limit on the amount your employer can contribute, and the employer may raise or lower the amount made available in future coverage periods. Specific HRA types do carry caps, covered below.
The money can never come back to you as cash. If any distribution can be made for something other than reimbursing qualified medical expenses, every distribution that year becomes taxable income. Unused balances carry forward only if the plan says so, and the employer is not permitted to refund any part of the balance to you.
Self-employed people are not eligible for HRAs, for the same reason they are not eligible for FSAs. There has to be an employer.
What an HSA Is
A health savings account is a bank or brokerage account titled in your name. You can fund it, your employer can fund it, and Publication 969 notes that family members or any other person may contribute on your behalf. Publication 969 also says flatly that an HSA is portable and stays with you if you change employers or leave the work force.
Contributions are capped and conditional. For 2026, Revenue Procedure 2025-19 sets the limits at $4,400 for self-only coverage and $8,750 for family coverage, with a qualifying high deductible health plan needing a deductible of at least $1,700 or $3,400 and out-of-pocket maximums no higher than $8,500 or $17,000. Revenue Procedure 2026-24 raises the 2027 contribution limits to $4,500 and $9,000, with minimum deductibles of $1,750 and $3,500 and out-of-pocket ceilings of $8,700 and $17,400. Anyone 55 or older adds $1,000 in catch-up contributions.
You have to hold qualifying coverage to fund it. You do not have to hold any coverage to spend it, which is the point covered in can you have an HSA without insurance.
HRA vs HSA Side by Side
| HRA | HSA | |
|---|---|---|
| Who funds it | Employer only | You, your employer, or anyone |
| Who owns the account | The employer’s plan | You |
| Annual limit | None on a standard HRA; type-specific caps apply | $4,400 / $8,750 for 2026; $4,500 / $9,000 for 2027 |
| Requires a specific health plan | No, unless it is an ICHRA or QSEHRA | Yes, an HSA-qualified HDHP |
| Portable when you leave | No | Yes |
| Unused money | Carries forward only if the plan allows, then stays with the employer | Rolls over indefinitely and stays yours |
| Can be invested | No | Yes, if your custodian offers it |
| Available to the self-employed | No | Yes |
| Can pay individual market premiums | Yes for an ICHRA or QSEHRA | Generally no |
The Four HRA Types That Actually Matter
Standard group HRA. Sits alongside an employer’s group plan and reimburses cost sharing. This is the design that blocks HSA contributions.
Individual coverage HRA (ICHRA). Instead of buying a group plan, the employer gives you money to buy your own. The rules live at 26 CFR 54.9802-4. You and your covered dependents must be enrolled in individual health insurance coverage for every month covered by the HRA. The employer cannot offer both an ICHRA and a traditional group plan to the same class of employees. The arrangement must be offered on the same terms across a class, with the amount allowed to vary only by age (capped at a 3-to-1 spread) and family size. You must be given the chance to opt out and waive future reimbursements once per plan year, which matters because accepting an ICHRA generally makes you ineligible for a marketplace premium tax credit. There is no dollar cap on an ICHRA.
Qualified small employer HRA (QSEHRA). For employers with fewer than 50 full-time employees that offer no group health plan. This one is capped. For taxable years beginning in 2026, section 4.63 of Revenue Procedure 2025-32 limits total payments and reimbursements to $6,450 for employee-only coverage and $13,100 for family coverage. HealthCare.gov publishes the identical caps as $537.50 and $1,091.66 per month, which is a clean two-source confirmation. Employees must maintain minimum essential coverage to use the money, the arrangement has to be offered on the same terms to all full-time employees, and the employer must give 90 days’ notice before each plan year. The 2027 caps had not been published as of September 5, 2026, since the IRS issues that package each fall.
Excepted benefit HRA. A small side account an employer can offer next to a group plan, usable for things like dental, vision, and COBRA premiums. Revenue Procedure 2025-19 caps the amount newly made available at $2,200 for plan years beginning in 2026, and Revenue Procedure 2026-24 raises it to $2,250 for 2027.
When an HRA Blocks Your HSA, and When It Does Not
Publication 969 gives the general rule: an employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot contribute to an HSA. The HRA counts as disqualifying other coverage.
Four HRA designs are carved out, and Publication 969 names each one.
Limited-purpose HRA. Pays only for dental care, vision care, accidents, disability, and specific-disease or fixed-indemnity coverage, plus preventive care. It does not disqualify you. This is the same logic behind a limited-purpose FSA, and it is the pairing most employers offer next to an HSA plan.
Post-deductible HRA. Reimburses nothing until the section 223 minimum annual deductible has been met. The HRA’s deductible does not have to match the health plan’s, but benefits cannot start before that statutory minimum ($1,700 self-only or $3,400 family for 2026).
Suspended HRA. You elect, before the coverage period starts, to switch the HRA off for the year except for preventive care and the permitted coverage categories. When the suspension ends, so does your HSA eligibility.
Retiree-only HRA. Reimburses only expenses incurred after retirement. Once you retire and it goes live, HSA contributions stop.
There is a fifth, narrower path for ICHRAs. Under 26 CFR 54.9802-4, an employer may offer a class of employees a choice between a regular ICHRA and an HSA-compatible individual coverage HRA, which is one limited so the employee is not disqualified under section 223. IRS Notice 2026-5 frames the practical version of this: an HRA, including an ICHRA, generally has to reimburse premiums only in order not to disqualify an employee from HSA eligibility.
None of this is something you can arrange yourself. It is a plan design question for your employer or benefits administrator. Your job is to read the plan document and ask which category yours falls into before you open or fund an HSA. Getting it wrong triggers a 6% excise tax on excess contributions for every year they sit in the account.
What Happens When You Leave the Job
This is the difference with the largest dollar consequences.
The HRA stops. Unless the plan continues coverage for former employees, unspent HRA money stays with the employer. It cannot be cashed out, rolled to an IRA, or transferred to a new employer’s plan. If your departure is coming, spend down the balance on qualified expenses while you are still enrolled.
The HSA follows you. The balance is yours, keeps its tax treatment, and continues to pay qualified expenses whether or not you have coverage. HSA rollover covers moving a workplace HSA to a custodian you choose.
One overlap worth knowing: HSA money can pay COBRA premiums tax free, which is one of only four premium exceptions Publication 969 allows. If you are weighing continuation coverage, COBRA insurance cost has the arithmetic. Some excepted benefit HRAs also reimburse COBRA premiums, so check the plan before you pay one out of pocket.
Which One You Should Want
If you are choosing between job offers, an HSA-qualified plan with employer HSA contributions beats an equivalent HRA dollar for dollar, because those dollars become yours permanently. A generous ICHRA can still be the better total package if the money is large enough, since an ICHRA has no cap while the 2026 HSA ceiling is $4,400 or $8,750. Compare the actual dollar amounts, not the account type.
If you are self-employed, the HRA is simply unavailable and the HSA is not. HSA for the self-employed covers opening one on your own, and self-employed health insurance cost covers picking a qualifying plan. For a full comparison of the account you fund yourself against the one your employer runs, see HSA vs FSA.
If you are offered a QSEHRA, do the math on the marketplace before accepting. The QSEHRA amount reduces or eliminates any premium tax credit you would otherwise qualify for, and HealthCare.gov says so directly.
Whichever account you end up with, it changes how you pay, not what you are charged. Check a cash rate against the fair price tool before spending account dollars, use how to negotiate medical bills on anything already billed, and check hospital charity care if a facility bill is large. A tax-free dollar spent on an inflated price is still an inflated price.
The Bottom Line
An HRA is your employer’s money, held under your employer’s rules, and it generally ends with the job. An HSA is your money, capped at $4,400 self-only or $8,750 family for 2026 and $4,500 or $9,000 for 2027, and it is portable for life. QSEHRAs cap out at $6,450 and $13,100 for 2026; ICHRAs have no cap but require you to hold individual coverage every month.
A general-purpose HRA blocks HSA contributions. Limited-purpose, post-deductible, suspended, and retiree-only HRAs do not, and an HSA-compatible ICHRA is expressly permitted. Read your plan document, confirm which type you have before funding an HSA, and take any real filing question to a tax professional.