CARD T210
High-Deductible Health Plan (HDHP)
A plan meeting a defined high-deductible structure. HSA eligibility requires compliance with specific tax rules, not merely a large deductible.
How it works
HSA eligibility ordinarily requires coverage meeting federal HDHP requirements, including deductible and out-of-pocket rules, with permitted exceptions for preventive care and other specified benefits. A high deductible alone is insufficient. Beginning in 2026, qualifying individual-market Bronze and Catastrophic plans receive special HSA-compatible treatment under federal rules, even if they do not satisfy the general HDHP definition. Other HSA eligibility restrictions still apply. Annual dollar thresholds should be checked for the tax year in question. [10] [15] [16]
A worker has a large deductible but also disqualifying first-dollar medical coverage. The deductible alone does not establish HSA contribution eligibility.
HDHP is an insurance design; HSA is a separate account with its own eligibility rules.
CARD T212
Flexible Spending Arrangement (FSA)
A health flexible spending arrangement (FSA) lets employees set aside pay before taxes through an employer plan to reimburse eligible medical expenses. Employers may also contribute. Unused money may be lost under the plan’s rules.
How it works
A health FSA is an employer arrangement commonly funded through employee salary reductions; employers may also contribute. The annual elected health reimbursement amount is generally available during coverage even before all payroll deductions occur. Unused funds are generally forfeited, though a plan may allow a limited carryover or a grace period, not both for the same health FSA year. A general-purpose health FSA can disqualify HSA contributions; limited-purpose designs can be compatible. [10] [15]
An employee elects $1,200 for the year. A qualifying $600 early-year expense can generally be reimbursed during coverage even if only $100 has been deducted so far.
An FSA’s uniform coverage rule differs from an HSA, which pays from available account funds.
CARD T213
Health Reimbursement Arrangement (HRA)
A health reimbursement arrangement (HRA) is an employer-funded benefit that pays back eligible medical expenses. Employees do not contribute their own salary, and unused benefits are not automatically theirs to take when they leave.
How it works
An HRA is funded only by the employer and reimburses eligible medical expenses under its design. Employees cannot fund it through salary reductions. Reimbursements for qualifying expenses are generally excluded from income. Carryover and post-employment access follow the arrangement; it is not automatically a portable employee-owned savings account. Integrated HRAs, individual-coverage HRAs, and other types have different requirements. [10] [15]
An employer offers up to $1,000 of eligible reimbursement. A worker submits a qualifying $200 expense and receives reimbursement under the plan’s process.
HRA means employer reimbursement, not employee salary-reduction funding.
Practice Health Reimbursement Arrangement (HRA) · 3 questions
APPLY THE TERMS
Practice questions
Select an answer, then check it to see why each option is right or wrong.
T210 · High-Deductible Health Plan (HDHP)
0 of 3 answered
T212 · Flexible Spending Arrangement (FSA)
0 of 3 answered
T213 · Health Reimbursement Arrangement (HRA)
0 of 3 answered
Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.