New HSA legislation makes education the next frontier for benefits leaders
Congressional passage of the recent tax legislation marks the most consequential expansion of health savings accounts since their inception over two decades ago.
Provisions in the bill — such as one increasing HSA availability for people with bronze or catastrophic health plans and one that expands pre-deductible coverage — signal powerful support for a solution that already helps tens of millions of Americans manage escalating health care expenses.
As benefits leaders, our initial focus may be on operational adaptation, but the true, larger hurdle ahead lies in effective education and connecting with consumers where they are.
This is the key to helping employees understand, adopt, and gain maximum benefit from an HSA.
This need for clear communication is critical, especially when considering the sheer size of the newly eligible market.
For example, 7.3 million people are enrolled in bronze or catastrophic plans through ACA marketplaces as of January 2025.
Historically, nearly all these plans were not HSA compatible, despite their high cost-sharing.
Now, the real work begins: providing consumers shopping for health insurance this fall during open enrollment with a clear explanation that these plans are HSA-eligible.
In addition, individuals enrolled in direct primary care arrangements can now be HSA-eligible, and employers and health insurers may cover telehealth services on a pre-deductible basis in HSA-compatible plans.
Communication matters
Taken together, these reforms will result in millions more being eligible to fund an HSA, but it should not be taken for granted that they will automatically sign up.
In addition to making sure that they know they are eligible, the benefits of an HSA need to be communicated in a way that will connect effectively with these consumers.
More than 20 years on, the benefits of HSAs would seem to be obvious, yet many consumers remain unaware of their full potential.
While offering triple tax advantages, financial flexibility, and long-term value to both employees and employers, HSA adoption and utilization often fall short due to generic, one-size-fits-all communication from employers.
Consumers have trouble with understanding what is HSA-eligible and then with estimating how much cash they should put away.
New research from WEX and Visa highlights that messaging emphasizing the functional and emotional benefits of HSAs resonates more than the technical details that have long been the focus of employee communication.
When asked why people should own an HSA, respondents emphasized:
Emotional reasons: Hedge for health, peace of mind, weapon to combat inflation, smarter with your money.
Functional reasons: Reduce tax burden, maximize free money.
Hybrid emotional and functional reasons: plan for the future, emergency savings.
According to the research, it is notable that the vast majority — over 90% — of HSA owners don’t invest, suggesting that most may be using the accounts primarily for current spending and short to intermediate term savings.
Our messaging to consumers should take that into account.
Relentlessly hammering home investment-themed messages doesn’t meet most where they are.
That said, it is equally striking that our research reveals a longer-term goal: Nearly 60% see these accounts as important for retirement.
This provides an opportunity to help nudge people along a path to eventually fulfilling this aspiration.
Education Strategies
To prepare for open enrollment season this year, employers and benefits administrators must evolve their education strategies.
And the way to break through?
Tailored messaging, rooted in data-driven segmentation and personalization, can benefit employees and significantly accelerate HSA adoption and utilization.
In an environment saturated with information, especially during open enrollment, long PDFs and infrequent touchpoints only add to confusion.
Instead, benefits leaders should focus on:
Segmentation: Divide audiences by factors like age, income, life stage, health status, and usage behaviors to understand diverse needs.
Personalization: Use individual names and create personalized contribution scenarios that align with specific life goals, empowering consumers to see how an HSA applies directly to their situation.
Relevance: Ensure messages highlight how HSAs provide tangible solutions for varying healthcare situations and financial objectives.
Employer contributions to HSAs also play a significant role.
Our research indicates that employer contributions are, by a wide margin, the most important factor influencing employees’ decision to contribute to an HSA.
Head v. Heart
Ultimately, our research reveals that while consumers’ understanding and adoption of HSAs have matured, their engagement remains deeply rooted in personal emotions and individual circumstances.
Effective strategies for maximizing HSA adoption must acknowledge these underlying emotional drivers, moving beyond purely rational or informational approaches to resonate meaningfully with diverse employee populations.
This latest legislation has opened a door that has been closed for twenty-one years.
Now, it’s up to benefits leaders to capitalize on this opportunity by making HSAs truly accessible and understandable to every employee, ensuring they can harness the full power of these invaluable financial tools.
Of course: HSA eligibility and tax benefits depend on individual circumstances. Before doing anything involving taxes or recommending tax-related strategies to employers or employees, consult a qualified tax advisor for guidance.