Helping Employees Use Their HSA Through Account Education

Most employees sign up for an HSA during open enrollment and never think about it again until they need to use it. They know it’s the account tied to their debit card for medical expenses, but few realize it’s one of the few benefits that rolls over every year, moves with them if they change jobs, and can even grow through investing. That gap between having an HSA and knowing how to use it is where a lot of the account’s value goes unclaimed. Here’s what employees typically get wrong, and how ongoing account education helps close that gap.

Key Takeaways

What Is an HSA and How to Use It Effectively

A Health Savings Account (HSA) is a tax-advantaged account available to employees enrolled in a qualified high-deductible health plan (HDHP). Employees can contribute pre-tax dollars, let the balance grow tax-free, and withdraw funds tax-free for qualified medical expenses at any time, including in retirement.

There’s a fourth angle to the tax savings that often gets overlooked: how the contribution reaches the account. Money contributed through payroll deduction skips the 7.65% FICA tax (Social Security and Medicare) in addition to income tax. Contributing the same amount from a personal bank account after tax only captures the income tax deduction, not the FICA savings. For employees paid through payroll, that’s a built-in advantage worth pointing out.

What sets an HSA apart from an FSA is ownership and permanence. The account belongs to the employee, not the employer. Unused funds roll over year after year, and the balance moves with the employee if they change jobs or health plans. There is no “use it or lose it” deadline.

What Employees Actually Get Wrong

Despite these advantages, many employees treat their HSA like a basic debit card for copays and prescriptions and stop there. The pattern across all gaps is the same: employees were told to open an HSA, but they were never taught how to use one.

Mistaking it for a “Use It or Lose It” Account

It isn’t. Employees often carry over habits from a Flexible Spending Account (FSA), where unused funds are forfeited at year’s end, and assume the same deadline applies here. An HSA works differently: any balance left at December 31 simply carries into the next year, and the year after that, with no cap on how long it can sit and grow. There’s no reason to rush a purchase in December just to “use up” the account.

Forgetting the Account is Fully Portable

An HSA is fully portable across employers and health plans, in a way most other benefits are not. If an employee leaves the company, changes jobs, or even retires, the account and everything in it goes with them. It isn’t tied to a specific employer-sponsored plan the way a 401(k) match or a group life insurance policy can be. Once the money is in the account, it belongs to the employee permanently, whether or not they stay on an HSA-eligible health plan going forward.

Missing the HSA Investing Opportunity

Once a balance clears a minimum threshold (typically employer- or custodian-defined), employees can often invest a portion of their HSA much like a retirement account, choosing from mutual funds or similar options rather than letting the balance sit in cash. Yet per Devenir’s 2025 Midyear HSA Research Report, only about 10% of all HSA accounts held any invested funds as of mid-2025, even though invested accounts carried meaningfully higher average balances than accounts that stayed in cash. For an employee not planning to tap the account for near-term medical costs, that’s a long-term growth opportunity going unused simply because no one told them it existed.

Underestimating Qualified Medical Expenses

Many everyday health costs beyond copays and prescriptions qualify as HSA-eligible expenses, including dental work, vision care, certain over-the-counter items, and more. When employees aren’t sure what counts, they tend to play it safe and pay out of pocket instead, leaving funds they’ve already set aside sitting unused. A little clarity here goes a long way toward making sure the account is used as intended.

HSA Investing Basics: Missing Out on Growth

For employees who don’t need to tap their HSA for near-term medical expenses, treating it as a long-term investment vehicle, similar in spirit to a 401(k), can meaningfully change their financial picture heading into retirement. The long-term effect of letting HSA dollars grow rather than sitting in cash is a widening gap between investors and non-investors. That upside only materializes if someone tells employees the option exists and shows them how to use it.

Why Account Education Matters More Than Enrollment

Most HSA education happens once a year, during open enrollment, when employees are already fatigued by benefits decisions. That timing means the actual mechanics of the account (how to invest it, what qualifies as an eligible expense, how to plan contributions around the annual IRS limit) get lost in the noise.

Ongoing, plain-language account education fixes this. Employees who understand their HSA year-round make better contribution decisions, use more of their qualified benefits, and are more likely to explore the investment option once their balance supports it. For employers, that translates into a benefit that’s actually appreciated rather than one that quietly goes underused.

This is where a Healthcare Account Specialist team can help. Ongoing HSA education, delivered directly to employees rather than buried in a benefits guide, is one of the most effective ways to close the awareness gap. Whether it’s fielding questions about eligible expenses, walking someone through their investment options, or clarifying how contribution limits work for the year ahead, having a dedicated resource makes the account education actually stick.

Sources

• IRS Revenue Procedure 2025-19 (2026 HSA contribution limits)
• Devenir, 2025 Midyear HSA Research Report, Executive Summary
• IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

Disclosures

Partnership Disclosure: APS Health Wallets’ Healthcare Account Specialist team administers HSA accounts in partnership with First Dollar, Inc. This is the only reference to this partner in this post, consistent with Health Wallets brand guidelines.

Investment Disclosures: HSA investment accounts are not FDIC-insured, are not bank-guaranteed, and may lose value. DriveWealth, LLC provides brokerage services, and Morningstar Investment Management LLC provides investment advisory services. Investing involves risk, including possible loss of principal.

Regulatory Note: HSAs are subject to the Gramm-Leach-Bliley Act (GLBA) data privacy requirements. HSAs are not employer-sponsored group health plans and are not subject to ERISA or COBRA continuation requirements.