What is the federal contribution limit for HRAs compared to HSAs?

The statement that HRAs have no federal contribution limit while HSAs have a maximum annual contribution limit is accurate. Health Reimbursement Arrangements (HRAs) are employer-funded plans that allow businesses to reimburse employees for qualified medical expenses. There is no federally mandated limit on how much an employer can contribute to an HRA; the employer has the discretion to set the contribution amounts based on their own policies.

On the other hand, Health Savings Accounts (HSAs) do have specific annual contribution limits, which are determined by the IRS and can change each year. These limits are based on factors such as whether the account holder has individual or family coverage. The contribution limits for HSAs encourage individuals to save for medical expenses while providing a tax-advantaged way to do so.

This distinction between HRAs and HSAs regarding federal contribution limits is essential for understanding how each type of account functions within the framework of employee benefits and the broader context of health care financing.