Health Savings Accounts (HSAs) remain one of the most powerful levers in the employer-sponsored benefits toolkit. As healthcare costs climb, HSAs can help organizations manage expenses while boosting employee engagement in healthcare decisions and strengthening the overall value of a benefits program.

As with any consumer-directed benefit, design, communication, and administration matter. Adoption and utilization are rising steadily, giving benefits administrators an opportunity to maximize impact by steering employees toward smarter use.

• By year-end 2024, total HSA assets reached nearly $147 billion spread across more than 39 million accounts, representing 19% growth in assets and 5% growth in account count year-over-year.¹
• Investment adoption within HSAs continues to climb: in 2024, about 3.5 million accounts (≈ 9% of total) held some portion of their balance in investments.¹
• In terms of access, approximately 39% of private-sector and state/local government workers had access to an HSA through their employer in 2024.²
• Access has steadily increased over the past decade: in 2015, only ~24% of private-industry workers had HSA access; by 2024, that had risen to 39%.³
• Among all HSA contributions in 2024, 24% came from employer contributions.⁴
• Of all accounts, 61% (by assets), totaling $97 billion, were affiliated with an employer.⁵

These figures underscore that HSAs are no longer a niche benefit; they’ve become a core component of the healthcare funding landscape. For administrators, that means more influence — and more responsibility. To capture the full value of these accounts, it’s critical to avoid the following common mistakes, which can erode both individual and organizational gains.

Many employees assume they can’t afford to contribute to an HSA, or that these accounts are only useful for the wealthy or for younger, healthier workers. In reality, HSAs support a broad cross-section of employees, including families and those managing chronic conditions. Even modest contributions can go a long way when combined with the tax advantages.

Tip for administrators: Employer seeding can make a measurable difference in adoption and engagement. Even small contributions, whether offered upfront or as a match, lower the barrier to entry and help employees experience the value of the account faster. Pairing this with clear, simple examples of tax savings can dispel misconceptions and boost participation.

Confusion around eligible versus ineligible expenses is a persistent issue. For instance, cosmetic procedures and gym memberships are not covered, and misuse can trigger a 20% penalty in addition to taxes owed.⁶

Tip for administrators: Reduce errors and frustration by providing quick-reference guides, ongoing communications, and training during open enrollment.

Employees often conflate HSAs with flexible spending accounts (FSAs). The rollover rules, ownership structure, and investment potential are very different. And under current IRS regulations, participants with an HSA can only pair it with a limited-purpose FSA for dental and vision expenses.

Tap into the Alegeus Marketing Portal for resources to help explain and reiterate the HSA basics, including videos, email templates, and info sheets.

Exceeding the IRS annual contribution limit can saddle employees with a 6% excise tax on the excess each year it remains uncorrected.⁶ Many employees aren’t aware of this risk until it’s too late.

Tip for administrators: Configure payroll and benefits systems to alert employees when they are approaching contribution caps. Send midyear and year-end reminders that include both employer and employee contributions in the total. If excesses occur, provide guidance on correcting them before the tax filing deadline to avoid penalties.

HSAs are maturing fast, but they are still evolving, and best practices continue to emerge. As a benefits administrator, you have a front-line opportunity to shape adoption and optimize outcomes.

• Monitor your adoption rate, average account balances, investment adoption, and distribution behavior to spot trends (or issues) early.
• Benchmark internally against the national trends (e.g., ~39% access, ~$147B in assets, ~9% investment adoption).¹
• Partner with HSA custodians that provide reporting dashboards, predictive analytics, and behavioral nudging tools.
• Experiment with different communication strategies or contribution models, then iterate.

By guiding employees past common missteps and promoting strategies that maximize value, administrators can position HSAs as more than just a spending account. They become a cornerstone of financial wellness, long-term savings, and organizational cost control, delivering lasting impact for your customers and your organization.

Sources:

¹ Devenir | ² Sentinel Group | ³ U.S. Bureau of Labor Statistics | ⁴ National Association of Plan Advisors | ⁵ Plan Advisor | ⁶ IRS