As open enrollment approaches, HR teams have an opportunity to help employees better understand and maximize one of the most powerful tools for managing healthcare costs, the Health Savings Account (HSA). Yet many employees remain unclear about what an HSA is, who qualifies, and how it can support both short-term healthcare needs and long-term financial goals.
Understanding HSAs
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals pay for qualified medical expenses. Employees must be enrolled in a High Deductible Health Plan (HDHP) to contribute to an HSA. The account allows pre-tax contributions, tax-free growth, and tax-free withdrawals when used for eligible healthcare expenses which is sometimes referred to as a “triple tax advantage.”
Funds roll over year to year and belong entirely to the employee, even if they change jobs or retire. For 2026, contribution limits are $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up contribution available to those age 55 or older.
Participation Restrictions
Not every employee can open or contribute to an HSA. In addition to being covered by a qualifying HDHP, participants:
- May not be covered by any other non-HDHP health plan (such as a spouse’s traditional plan).
- May not be enrolled in Medicare.
- May not be claimed as a dependent on another person’s tax return.
- May not contribute to both an HSA and a full-purpose health FSA for medical expenses at the same time.
HR professionals should remind employees to review their household coverage to ensure they meet these eligibility criteria before enrolling or contributing.
Communicating HSAs During Open Enrollment
Clear, simple communication can help employees appreciate the full value of an HSA. Consider these best practices:
- Explain how HSAs work with the HDHP. Many employees hesitate to choose a high-deductible plan because of cost concerns. Demonstrate how employer contributions and tax savings can offset out-of-pocket expenses.
- Use visuals and examples. Show how a modest monthly contribution can build meaningful savings over time, especially when invested.
- Provide comparisons. Highlight key differences between HSAs, FSAs, and HRAs to help employees make informed choices.
- Promote long-term benefits. Position the HSA not only as a healthcare account but as a supplemental retirement resource for future medical expenses.
- Offer decision support. Use benefits portals, webinars, or short videos to explain eligibility and contribution rules.
Helping employees understand HSAs can improve participation, satisfaction, and confidence in your benefits program, turning open enrollment into an opportunity for both immediate savings and long-term financial well-being.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
