HSAs: The Most Underused Financial Wellness Tool in Your Benefits Strategy

By Chris Johnson

Why HSAs Should Be Highlighted in 2026 and Beyond

Health Savings Accounts (HSAs) have traditionally been viewed as a tax-advantaged way to pay for out-of-pocket medical expenses. But today’s data tells a much bigger story: they can function as a powerful financial wellness tool.

HSAs are increasingly operating like powerful long-term investment vehicles rather than just spending accounts. Yet misconceptions persist across the workforce, and employee education continues to lag. With rising healthcare costs and growing financial pressures, it is a good time to elevate the HSA conversation.

Let’s examine the triple tax advantages, workforce perception trends, and evidence-based insights to guide employers in maximizing HSA participation and value.

1. The Triple Tax Advantage: HSAs Can Outperform Other Accounts

HSAs are uniquely structured to grow wealth in three ways:

  1. Pre-tax contributions:  Employee and employer contributions are tax-free in most states.
  2. Tax-free investment growth:  Interest, dividends, and investment gains are not taxed in most states.
  3. Tax-free withdrawals for qualified health expenses:  This includes medical, dental, vision, prescriptions, and much more.

HSAs are the only tax-advantaged accounts with all three advantages. These features are unmatched by 401(k)s, IRAs, FSAs, or any other benefit account.

According to a GAO analysis, HSAs held $123 billion in total assets in 2023, underscoring their growing role as financial wellness tools beyond simple spending accounts.

2. HSAs as an Investment Vehicle: Participation Is Rising, but Slowly

A major shift is underway:  employees are beginning to invest HSA funds more frequently.

  • 20% of participants now invest their HSA savings, up from 18% the prior year.
  • Two-thirds of employers now offer HSA investment options, a 12% increase over two years.
  • The average HSA balance rose to $6,489 in 2024, up steadily over the last three years.

Even so, the opportunity remains substantial. Several studies indicate that only around 10% of employees funded or invested HSA dollars in the past year, reflecting a major education gap.

3. What does this mean for benefits professionals?

HSAs should not be positioned solely as tools for current-year medical expenses, but rather as long-term wealth-building vehicles that complement retirement savings. Because HSAs can be invested and carried into retirement, they offer the financial flexibility and security that employees want.

Employee Usage and Education Trends: A Growing Need for Guidance

New federal and employer survey data show:

  • 39% of workers had access to an HSA through employers in 2024, according to the Bureau of Labor Statistics. 
  • HSA-qualified HDHP enrollment increased steadily through 2020, then stabilized. 
  • Withdrawals for qualified medical expenses account for over 97% of all HSA withdrawals, showing that participants use HSAs responsibly and strategically.
  • Younger employees (ages 26–34) consistently have lower withdrawal rates, indicating more opportunity to use HSAs as long-term investment vehicles.
     
     
Employee Education Remains the #1 Employer Concern

The PSCA finds that:

  • 62% of employers offer HSAs, but most educate employees only once per year during open enrollment.
  • Only one-third of employers explain HSAs as a retirement planning tool.
  • Fewer than one in three employers allow employees to view HSAs alongside retirement accounts.
  • This underscores the consultative opportunity for brokers and benefits administrators to step in with educational assistance throughout the year.

4. Employee Perceptions: A Workforce Ready for Financial Wellness Support

Employees overwhelmingly want to take steps to improve their financial well-being:

  • 74% made intentional financial wellness improvements last year, including budgeting, investing, and building emergency funds.
  • 84% of Gen Z say they are actively trying to improve their financial health, higher than any other generation.
  • Yet despite this interest, HSAs remain significantly underutilized as investment tools.

This gap between desire and action represents a hidden opportunity to boost engagement.

5. Contribution & Withdrawal Insights: What Employees Actually Do

IRS and GAO reporting provide a deeper look at monetary flows:

  • In 2022, the IRS recorded $43.6B in contributions and $25.4B in withdrawals across 16.5M HSA tax returns.
  • 84% of contributions come from employer payroll deductions, highlighting employer influence on participation.
  • Only 16% come directly from individual deposits, signaling an opportunity for employee education on maximizing contributions.

6. Why HSAs Should Be Highlighted in 2026 and Beyond

Given rising costs, employee financial stress, and the emerging investment potential of HSAs, HSAs should be a core strategic component of modern benefit design. Here is why:

HSAs strengthen financial wellness programs

Although most employees are already trying to improve their financial health, only about 10% are investing in HSAs. Additional education could make an immediate impact.

Employers want guidance

Employer concerns center on education, communication frequency, and integration with retirement planning, areas where benefits brokers and administrators can deliver immediate value.

HSAs help employees at all income levels

Although utilization is currently higher among higher-income workers, HSAs remain one of the few benefits that meaningfully improve financial resilience for employees with rising healthcare costs now and into their retirement.

7. Actionable Recommendations for Benefits Professionals

  • Promote HSAs as both a short-term and long-term tool
    Emphasize the triple tax advantage and the role HSAs play in supplementing retirement savings.
  • Normalize investment messaging
    Highlight the rising number of employers offering investment options and the steady increase in average account balances.
  • Train HR teams and ask third-party administrators to provide year-round education
    Quarterly micro trainings, infographics, and payroll reminders can significantly improve engagement.
  • Use generational targeting
    Younger employees respond strongly to financial wellness content. Position HSAs as part of wealth building, not just healthcare spending.
  • Integrate HSAs into total rewards dashboards
    Encourage the display of HSAs alongside retirement accounts to reinforce long-term value.

Conclusion: HSAs Are Evolving and Your Benefits Strategy Should, Too

With billions of dollars flowing into HSAs and more employees than ever focusing on financial wellness, now is the moment to reframe HSAs as one of the most powerful investment tools available to the American workforce.

Delivering a data-driven, consultative approach can help employers:

  • Improve employee financial resilience
  • Boost HDHP adoption
  • Increase benefits satisfaction
  • Deliver long-term value to all generations of workers

HSAs are no longer just reimbursement vehicles; they are a cornerstone of a modern, competitive benefits strategy. 

FAQs

1. Why should HSAs be positioned as more than just spending accounts?

Many employees still think of HSAs strictly as tools for paying current medical expenses, but HSAs have evolved into one of the most powerful long-term investment vehicles available today. With a triple tax advantage:  pre-tax contributions, tax-free investment growth, and tax-free withdrawals for qualified healthcare expenses, HSAs uniquely support both short-term needs and long-term financial wellness. When positioned as part of a comprehensive financial strategy, HSAs can supplement retirement savings and strengthen overall financial resilience.

2. What keeps employees from fully using or investing their HSA funds?

Even though participation is rising, only around 10% of employees invest their HSA balances, largely due to limited awareness and education. Most employers only communicate about HSAs during open enrollment, and few explain how HSAs can be used for long‑term savings or retirement planning.
Employees benefit significantly from:

  • Clear explanations of how contributions and investments work
  • Year-round reminders and financial wellness content
  • Guidance tailored to different age groups, especially younger workers who are more likely to save than spend

Improved education can dramatically increase engagement, contribution levels, and investment behavior. Helping employers close this education gap drives stronger employee engagement and better financial outcomes.

3. How do HSAs strengthen a modern benefits and financial wellness strategy?

HSAs are uniquely positioned to help employees manage rising healthcare costs and build long-term financial security. Today, HSAs:

  • Provide unmatched tax advantages
  • Support short-term medical needs and long-term retirement planning
  • Help employees at all income levels build financial resilience
  • Are increasingly paired with investment options offered by employers
    As more employees focus on financial wellness, HSAs offer a meaningful way to improve both day-to-day budgeting and long-term retirement outcomes making them a cornerstone of a competitive benefits offering.

As more employees prioritize financial wellness, HSAs offer a meaningful way to improve both day-to-day budgeting and better long-term retirement results. They can help create better health and financial outcomes.

Thinking of adding an HSA to your benefits lineup?

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