Consumers went into 2025 feeling optimistic about finances. However, while they may feel better about their financial prospects, employees are looking to build confidence in their overall financial literacy, and 81% say their employers can do more to help meet this goal. Health savings accounts (HSAs) deliver significant financial perks, and as such, they play an important role in the financial wellness offerings for organizations of all sizes.
HSAs are a popular benefit, with more than 37 million active accounts. The triple tax advantages of HSAs make them an employee favorite. More specifically, HSAs help employees:
- Reduce taxable income: When employees contribute to an HSA, they reduce their taxable income and pay less in taxes when filing day rolls around.
- Accrue savings tax-free. Any earnings in the HSA, whether from interest or investments, are not taxed as long as the money remains in the account.
- Withdraw funds tax-free. HSA withdrawals are never taxed as long as the money is used to pay for eligible expenses.
Other attractive features of an HSA include account portability, year-over-year growth, easy accessibility and broad eligibility. With so much to gain, HR teams would be wise to encourage HSA participation, and to educate employees at all professional levels and age ranges about how an HSA can support their individual needs and lifestyle. Consider the following examples of how HSAs can appeal to all workforce demographics.
Start early, save more
Healthcare savings may not be top of mind for employees who are new to the workplace. Gen Z employees are the least likely generation to contribute to their HSA accounts. That’s a missed opportunity because younger employees who may have fewer healthcare expenses can make early gains by contributing to an HSA. Encourage employees to use savings calculators and other modeling tools to illustrate their long-term HSA savings and remind them of benefits like immediate tax savings, flexible funding approaches and account portability.
Support mid-career needs
Employees who are more established in their careers may be better positioned to contribute to their HSA, yet only 48% choose to do so. That may be due to conflicting financial obligations, such as student loans, daycare or education expenses, or increasing healthcare expenses from life changes like starting a family. Employers can drive higher engagement among millennials and Gen Z workers by demonstrating the ability to pay for out-of-pocket healthcare needs and positioning HSAs as long-term investment tools that contribute to financial independence and early retirement.
Find golden opportunities
Employees who are earning at their highest level are positioned to maximize their HSA contributions as a way to shield their earnings, especially if they take advantage of the $1,000 catch-up contributions for ages 55 and older (this is in addition to the annual IRS limits, which are $4,300 for self-only insurance coverage and $8,550 for family HSAs in 2025). It’s currently estimated that the average 65-year-old will need $165,000 in after-tax savings to cover healthcare expenses in retirement, so educating employees about the benefits of maximizing their contributions and the ability to withdraw HSA funds after age 65 for any purpose is important. (Note that funds withdrawn for ineligible expenses are taxed as income.)
5 communication strategies to boost HSA savings
1. Remind employees to keep track of their HSA balances and to factor in any employer contributions. The IRS limits annual HSA contributions, and employees who exceed those limits may face tax penalties. Limits for 2025 are $4,300 for individual insurance coverage and $8,550 for family insurance coverage, which includes all contributions from employees and employers.
2. Encourage employees to familiarize themselves with HSA-eligible expenses. There is something for everyone in HSA eligibility, and oftentimes employees are surprised to discover that products and services they use every day can be reimbursed through their HSA. Even more surprising are the unexpected items eligible for coverage, such as high-tech products, mental health counseling and weight management programs.
3. Help employees keep track of HSA spending and manage their receipts. One feature that makes HSAs especially adaptable to any lifestyle is that the IRS does not stipulate a required reimbursement timeframe. That means employees can “bank” their receipts and pay themselves back at any point after the HSA account was established. The key is to keep receipts safe and organized. Direct employees to apps that help track and manage expenses so they can be easily reimbursed when needed.
4. Alleviate employee stress about healthcare costs. Three in four adults say they are worried about being able to afford unexpected medical bills. In another study, one-third of respondents said that out-of-pocket costs and deductibles are unaffordable. Remind employees that HSA funds can be used to pay for deductibles, co-pays and coinsurance, and suggest employees make a minimum contribution to cover each year’s deductible.
5. Position HSAs as an important part of an employee’s investment strategy. Direct them to tools such as tax-saving calculators and future value calculators that can illustrate HSA growth potential. Also, encourage employees to speak with a licensed financial advisor when making HSA investment decisions.
HSAs provide employees of all generations with significant financial advantages: tax-deductible contributions, tax-free growth and tax-free withdrawals for medical expenses. They also allow for flexibility in how funds can be used, and with no expiration date, they can accumulate over time. With consistent engagement and communications that resonate with your entire workforce, employers can increase HSA utilization, build financial literacy and confidence, and help employees manage healthcare costs now and into the future.
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