Can I have an HRA and an FSA at the same time?

If your employer offers a health reimbursement arrangement (HRA), you have access to an individualized health benefit that empowers you to make your own healthcare choices in ways traditional group health insurance doesn’t.

But it’s important to understand how an HRA works with other popular health benefits, including a healthcare flexible spending account (FSA). If your employer offers you a health FSA in addition to an HRA, there are special rules to keep in mind as you coordinate the two health plans.

This blog post discusses how HRAs and FSAs are different, how having both can benefit you, and what regulations you’ll need to follow to coordinate your health spending.

Learn more about the differences between HRAs, FSAs, and HSAs in our comparison chart.

What is a health reimbursement arrangement (HRA)?

qualifying medical expenses. Depending on the type of HRA your employer offers, they may reimburse you for your individual health insurance premiums, out-of-pocket health expense, or both.

Reimbursements your employer makes through an HRA are tax-free for the organization. They can also be income tax-free for you as an employee if you have a qualifying health insurance plan that provides minimum essential coverage (MEC). Otherwise, your reimbursements will be taxable income.

HRAs are employer-owned, meaning your employer will keep any allowance you haven’t requested through reimbursement. Your employer decides how much tax-free money they want to offer you each month, and also determines if you can use your HRA funds for only insurance premiums or other qualified expenses, too.

Unlike health savings accounts (HSAs), only your employer can contribute to an HRA. Any unused funds left in your arrangement at the end of the year stay with the employer.

The three most popular types of HRAs are the:

Qualified small employer HRA (QSEHRA)
- A QSEHRA is a simple, controlled-cost alternative to traditional health plans for employers with fewer than 50 full-time equivalent employees (FTEs). A QSEHRA can reimburse employees for individual health insurance premiums, out-of-pocket expenses, or both. QSEHRAs are also subject to an annual maximum contribution limit.
- If your employer offers a QSEHRA, they can’t combine it with an FSA.
Individual coverage HRA (ICHRA)
- A flexible health benefit that employers can use as a standalone health benefit or as an alternative for employees who don’t qualify for their group health insurance plan. To participate in an ICHRA, you must have qualifying individual health insurance coverage. With an ICHRA, your employer can reimburse you for insurance premiums, out-of-pocket medical expenses, or both.
Group coverage HRA (GCHRA)
- Also known as an integrated HRA, a GCHRA is a type of HRA that supplements an employer’s group health insurance plan. It helps employees cover out-of-pocket expenses their group plan doesn’t fully pay for, such as deductibles.
- Employers often choose to offer a GCHRA alongside a high-deductible health plan (HDHP). But they can pair them with any traditional group policy.

HRAs provide employers with a more flexible and affordable alternative to group health insurance. This personalization and inclusivity has helped HRAs grow more prevalent in today’s workforce, especially as health insurance costs continue to rise.

What is a flexible spending account (FSA)?

Next, let’s review FSAs. Health flexible spending accounts, sometimes called flexible spending arrangements, are employer-owned savings accounts where employers and employees can contribute pre-tax money toward future tax-free healthcare spending.

Like QSEHRAs, health FSAs have an annual maximum contribution limit set by the IRS. In 2023, the annual combined limit¹ you and your employer can contribute to a health FSA is $3,050. However, if your spouse has a separate FSA under their employer, they can also receive contributions up to the cap.

FSAs are tied to your employment—just like HRAs—so the account isn’t maintained if you leave your job.

Also similar to HRAs, FSA funds are subject to a “use-it-or-lose-it” policy. Any unused funds at the end of the plan year go back to your employer. That means any money you don’t spend by the end of the plan year won’t roll over. Therefore, it’s best to use all your available money on your out-of-pocket expenses to reap your FSA’s full benefit.

There are three types² of FSAs:

Healthcare FSA (HCFSA)
- Healthcare FSAs allow you to pay for out-of-pocket medical expenses like deductibles, copays, prescriptions, dental and vision expenses, and more.
Limited expense healthcare FSA (LEX HCFSA)
- You can only use a limited-purpose FSA to pay for out-of-pocket dental and vision care expenses. Because of these restrictions, this is the only type of FSA that works alongside an HSA.
Dependent care FSA (DCFSA)
- A dependent care FSA allows you to pay for things like nannies, daycare, preschool, and after-school care for dependents younger than 13 while you work. You can also use it for adult dependents with physical or mental disabilities who require adult daycare while you work.

You can use FSA funds either through expense reimbursements or with FSA debit cards.

How do HRAs and FSAs compare?

To further break down the differences between HRAs and healthcare FSAs, below is a quick comparison chart between the two account-based health plans.

Comparison Point	HRA	Health FSA
What is it?	HRAs are employer-funded, tax-advantaged health benefit plans used to reimburse employees for eligible medical expenses. Popular types include QSEHRA, ICHRA, and GCHRA.	FSAs are employer-established benefit plans that allow for tax-free reimbursement of qualified medical costs.
What are the eligibility requirements?	Eligibility depends on the type of HRA your employer offers. QSEHRA: All full-time employees with the ability to include part-time employees. ICHRA: Employees must have a qualified individual health insurance plan to participate. Employers can customize eligibility by establishing employee classes. GCHRA: All employees who participate in the employer’s group health insurance plan can participate. Owner eligibility is dependent on your business entity type.	All employees who aren’t self-employed can participate.
Who owns the account/arrangement?	An HRA is an employer-owned arrangement.	An FSA is an employer-owned account.
What is the average employer contribution cost?	Only pay for employee utilization (not pre-funded).	100% paid regardless of utilization.
Who can contribute?	Only the employer can contribute.	The employee and employer can contribute.
How much can you contribute each year?	Employers determine their contribution amounts. However, the IRS limits QSEHRA maximum annual allowance amounts. The 2025 employer annual contribution limit for QSEHRA is $6,350 per self-only coverage and $12,800 for family coverage.	The employer determines contribution amounts, but it can't exceed the IRS annual limit of $3,300 in 2025.
Is the account/arrangement taxed?	No, it’s tax-free for the employer and income tax-free for employees.	No, it’s tax-free.
Is a health insurance plan required?	Depending on the type of HRA an employer offers, a health plan may be required. QSEHRA: No; Purchasing an MEC policy allows employees to receive tax-free reimbursements. ICHRA: Employees must have qualifying individual health insurance to participate. GCHRA: Employees must be enrolled in their employer’s group health insurance plan.	It depends. A limited-purpose FSA is an excepted benefit and doesn’t require an employee to purchase insurance. A health FSA must accompany group insurance to comply with Affordable Care Act (ACA) market reforms for organizations with 50 or more FTEs.
What qualified health expenses can you use benefit dollars for?	Unreimbursed medical care expenses as defined by IRC 213(d)1³, including health insurance premiums. You can see a full list of eligible items in IRS Publication 502.	Unreimbursed medical care expenses as defined by IRC 213(d). You can’t use⁴ an FSA on insurance premiums.
Do funds carry over to the next year?	This depends on how your employer set up your HRA. The IRS states employers can only allow: Up to a $500 rollover A 2.5-month grace period to use funds No carry over to the following year In most cases, HRA funds don’t roll over	Yes, if determined by the employer. The IRS allows up to $660 to roll over⁵ into the next year.
Who administers the account/arrangement?	The employer or a third-party administrator (TPA).	The employer or a third-party administrator (TPA).
Is the account/arrangement portable after the termination of employment?	No. Unused HRA funds stay with the employer once an employee stops working for them. However, employees don’t lose access to their individual health insurance plans if they had a QSEHRA or ICHRA.	No. The account can’t be maintained if the employee no longer works for the employer.

How do HRAs and FSAs work together?

If your employer offers you both an HRA and an FSA—great! Using both is an excellent way to maximize employer contributions to your healthcare, optimize your tax savings, and save even more on your medical services and other out-of-pocket expenses, such as your prescription costs.

However, an FSA only works alongside certain types of HRAs.

Do QSEHRAs and FSAs work together?

You can’t use an FSA with a QSEHRA. According to the IRS, you can’t combine a QSEHRA with any other group health plan. Under Section 9831⁶ of U.S. Code Title 26, an employer is only eligible to offer a QSEHRA if they don’t offer a group health plan to any employees. This includes other HRAs, health FSAs, and limited-purpose FSAs that only cover dental care or vision expenses.

However, if you’re using your spouse’s FSA (not one your employer offers), you can coordinate it with your QSEHRA. Just ensure you follow your plan documents and the rules in the next section to stay compliant.

Can you use an ICHRA and an FSA together?

Yes, you can use an ICHRA and an FSA together. But there are some special rules you’ll need to follow to coordinate the two.

When using an ICHRA and an FSA:

You can’t pay for the same eligible expenses from both accounts. For example, you can’t request reimbursement for an expense from both your HRA and FSA.
- Since they are both tax-advantaged benefits, this is known as “double dipping⁷.”
- IRS Publication 969⁸ requires a written statement for health FSAs stating you didn’t pay for the expense under any other health coverage, including HRAs.
Unless otherwise specified in your employer’s plan documents, you must use your total HRA allowance before using your healthcare FSA funds.
- This makes it more likely that you will forfeit any unused balance in your FSA at the end of the year. Your employer can change your plan documents to allow FSA funds to be used first on medical expenses.

Can you use a GCHRA and an FSA together?

Yes, you can coordinate an integrated HRA with an FSA. Same as an ICHRA, your employer must design your plan documents to allow you to use either your FSA or GCHRA first. You’ll also need to be careful to avoid “double dipping.”

Conclusion

When you look at your benefits package, you may see several different types of health coverage and employee benefit plans to pick from. But it’s important to know you may not have to choose just one.

Using an HRA and an FSA together is a smart way to take advantage of employer-sponsored health benefit plans. It allows you to access more tax-free money for the qualifying medical expenses you incur for yourself, your spouse, and your dependents.

While an FSA doesn’t work alongside a QSEHRA, you can use one with an ICHRA or GCHRA. By following the guidelines for FSA coordination, you’ll be ready to use both benefits like a pro!

This article was originally published on February 1, 2012. It was last updated on August 14, 2023.

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Chase Charaba

Chase Charaba is the Content Marketing Manager at PeopleKeep. He joined PeopleKeep as a content marketing specialist in February 2022. As someone who has written about HRAs for almost three years and personally used both a QSEHRA and ICHRA, he has a deep understanding of the benefits and how they can help small employers and their employees. Chase has written more than 350 blog posts for various companies and projects throughout his career. He’s worked with digital marketing agencies and in-house marketing teams. He’s also an aspiring fiction author, landscape photographer, and small business owner.