The Plan Sponsor Council of America’s 2026 Health Savings Account (HSA) Survey found that employee HSA education is now a top concern for employers. Most provide education during open enrollment, yet growing interest in year‑round support highlights the need for continuous communication. Learning about HSAs, cited by 65.5% of employers as a primary or secondary concern, can strengthen employee engagement (reported by 44.2%) and help more people take advantage of savings opportunities.
01
What is an HSA?
Employers offering an HSA compatible high-deductible health plan (HDHP) can boost employee understanding and enrollment by covering core education topics throughout the year. Here are twelve common areas to prioritize.
02
No use-it-or-lose-it rule
Many employees are more familiar with the health FSA, particularly the requirement to spend down the funds by the end of the plan year to avoid potential forfeitures. HSAs provide the opposite incentive: to maintain the largest possible balance and grow it year after year.
03
No administrative gatekeeper
Employees do not need to submit expenses to a third-party administrator for approval. Employees decide which expenses to use the HSA for, and it is their responsibility to report any withdrawals for non-medical expenses on their individual tax return (Form 8889) as subject to income taxes and (prior to age 65) a 20% additional tax.
04
HSA eligibility
The employee must be enrolled in the HDHP to make or receive HSA contributions, and the employee cannot have any disqualifying coverage. Common examples of disqualifying coverage include enrollment in a non-HSA compatible medical plan (e.g., PPO or HMO dependent coverage through a family member) and a spouse’s general purpose health FSA enrollment (which blocks both the spouse and employee from HSA eligibility).
05
Medicare interaction
Not all employees age 65 or older are blocked from HSA eligibility. Only those employees actually enrolled in any part of Medicare cannot make or receive contributions to the HSA. Those delaying Medicare enrollment until retirement can participate in the same manner as any other employee, but they should be aware that the subsequent six-month retroactive Medicare enrollment will also retroactively block HSA eligibility.
06
Contributions
The 2027 contribution limit is $4,500 for employee-only coverage and $9,000 for family coverage. The family coverage limit is available for employees covering at least one other individual under the HDHP. Any employer HSA contribution applies toward these annual limits. A $1,000 catch-up contribution is available for employees who are age 55 or older by the end of the year. Contributions made through payroll via the cafeteria plan have the additional advantage of avoiding FICA payroll taxes. Employees can change their HSA contribution election at least monthly, with no qualifying life event required.
07
Distributions
Employees can use the HSA on a tax-free basis for any qualifying medical, dental or vision expenses they incur. They can also use the HSA for their spouse’s and children’s expenses. Although children can remain enrolled in the HDHP until age 26, employees can use their HSAs for a child’s expenses on a tax-free basis only if the child is a tax dependent, generally requiring that the child be under age 19 or under age 24 if a full-time student. HSAs can also be used for a domestic partner’s expenses on a tax-free basis only if the domestic partner is a tax dependent.
08
Other accounts
Employers offering an HDHP with HSA often also make available a limited purpose health FSA. These arrangements preserve HSA eligibility by restricting eligible expenses to only dental, vision and preventive costs. Employers offering an HRA often structure the arrangement to be available on a post-deductible basis for HDHP participants to preserve their HSA eligibility.
09
Lower premiums
In most cases, the employee-share of the premium for the HDHP option is either the lowest-cost or one of the least expensive medical plan options. When paired with any employer HSA contribution, these up-front savings can alleviate the concern many employees have about the additional financial responsibility imposed by the higher deductible.
10
Higher deductible
Many employees do not have a clear understanding of how the higher deductible can apply in real world situations. Examples can demonstrate employee responsibility up to the deductible, as well as the applicable cost-sharing after the deductible (e.g., any copayments or coinsurance). Employers should emphasize that preventive services such as the annual physical, most vaccinations, and most evidence-based cancer screening tests are not subject to the deductible, but most other expenses (including prescription drugs) are the employee’s responsibility until the deductible is satisfied.
11
Savings opportunities
Employees are often surprised to learn that the HSA can serve as a longer-term savings vehicle for future health expenses or other goals, such as retirement. Those looking for an additional vehicle to save on a tax-advantaged basis, including those already contributing the maximum to the 401(k) plan, may find the HSA to be an attractive option for these reasons. The “shoebox rule” also allows employees to retain receipts and obtain reimbursement from the HSA in subsequent years to allow tax-free growth in the interim.
12
The triple-tax advantage
No other account can match the tax efficiency of an HSA. Its uniquely tax-advantaged structure for federal income tax purposes allows for pre-tax contributions (both employer and employee), tax-free growth and tax-free medical distributions. All states except California and New Jersey also recognize HSAs as tax-advantaged for state income tax purposes.
Empowering employees through informed HSA decisions
HSAs provide employees significant flexibility to maximize the benefit. Employers play a vital role in helping employees understand and use HSAs effectively by turning information into confident, informed decisions.
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