Paying for health care can be challenging, even for people who have insurance. Monthly premiums are only part of the cost. Deductibles, copays, coinsurance, and prescription medications can leave families paying hundreds, thousands, or even tens of thousands of dollars out of pocket each year. Finding ways to save money on health care costs has become increasingly important.
According to KFF’s 2025 Employer Health Benefits Survey, workers with employer-sponsored health insurance paid an average deductible of $1,886 for single coverage in 2025. Family health insurance premiums averaged nearly $27,000 a year, with workers contributing about $6,850 toward that amount. These high costs can make it harder for people to afford the care they need.
For those who have these programs available, Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs) can help can help lower health care costs for eligible medical expenses.
Health Care Costs Go Beyond Monthly Premiums
Many people think having health insurance means that most of their medical bills will be covered. In reality, insurance often requires people to share costs up to a certain limit before their plan pays the entire allowable amount.
Depending on the type of plan, individuals will likely need to pay deductibles, copays, coinsurance, and prescription drug costs during their plan year. Preventive care, while often covered at no cost under many programs, is only one part of staying healthy.
In TAI’s 2024 survey of 1,001 Kentucky adults, 57% of those with health insurance reported delaying or going without health care or prescription medications because of cost, demonstrating that affordability remains a challenge even for people who have coverage.
While HSAs, FSAs, and HRAs cannot eliminate these costs, they can help people save money on health care costs and make medical expenses more manageable.
How HSAs, FSAs, and HRAs Help Save Money on Health Care Costs
These accounts can all help save money on health care costs by paying for qualified medical expenses, but they work in different ways.
HSAs and FSAs allow eligible individuals and their employers to set aside money before taxes are deducted. So, no tax is paid on the money deposited into HSA and FSA accounts, making those dollars go further.
HRAs work differently. They are funded entirely by an employer. Employees then receive reimbursement for eligible medical expenses based on the employer’s plan rules.
Depending on the account, money in health savings programs can often be used for costs such as deductibles, copays, coinsurance, prescription medications, dental care, vision care, and many over-the-counter products, including pain relievers, birth control, and feminine hygiene products. The IRS has a guide that explains what counts as a Qualified Medical Expense.
Understanding the Differences
Although these accounts all have a similar purpose, they differ in how they operate.
Health Savings Accounts (HSAs) are only available to people with HSA-eligible health plans. With employer-sponsored coverage, this generally means enrolling in a qualified high-deductible health plan. Beginning in 2026, all Marketplace Bronze and Catastrophic plans are HSA-eligible, along with some Silver plans. One of the biggest advantages of an HSA is that unused money stays with the account holder from year to year and can even be used after changing jobs or retiring. Both you and your employer can contribute to job-based HSA accounts.
Flexible Spending Accounts (FSAs) are connected to job-based insurance plans, although not all employers offer them. During open enrollment, employees can decide how much to contribute on a monthly or per paycheck basis. The money is then deducted from the employee’s paycheck before taxes are paid on the remaining income. Employers can also contribute to an employee’s FSA account. Unlike an HSA, most FSAs require participants to use the money during the plan year, although some employers offer limited rollover options or grace periods.
Health Reimbursement Arrangements (HRAs) are funded only by employers. Employees do not contribute their own money. The money in the accounts can then be used to reimburse employees for eligible medical expenses up to a certain amount. Unlike FSAs and HSAs, HRAs can sometimes be used to pay premium costs. Each employer decides what expenses are covered and whether unused funds can carry over from year to year.
A Benefit Worth Using
Many employers offer one or more of these accounts as part of their benefits package. In fact, KFF reports that nearly 3 in 10 covered workers are enrolled in HSA-qualified high-deductible health plans, and some employers also contribute money to employees’ HSAs or HRAs. The report did not address FSAs.
A 2020 study from the University of Michigan found that more than 50% of those enrolled in HSAs made no contributions to their HSAs in the previous 12 months. This means many of these individuals have access to tax-saving or even employer-funded health care dollars, but fail to take advantage of them.
During open enrollment, it is a good idea to consider expected medical expenses for the coming year and to review available benefits, including those that offer opportunities to save money on health care costs. Enrolling in HSA, FSA, or HRA programs can help reduce out-of-pocket costs and make it easier to budget for health care.
Saving Money Starts with Understanding Your Options
HSAs, FSAs, and HRAs are not available to everyone, and each account has its own rules. However, for people who are eligible, these accounts can be a valuable way to save money tax-free for qualified medical expenses and to prepare for future medical costs.
As health care costs continue to rise, taking advantage of these benefits can make a meaningful difference for individuals and families. Learning how they work is an important step toward getting the most value from health care coverage.
Want to learn more about HSAs, FSAs, and HRAs? Click here to watch our in-depth webinar.