Clearing

the air
5 HSA misconceptions
many employees believe
 HSA made easy
Health savings accounts (HSAs) offer employers
the opportunity to better support their employees’
evolving health and wellness needs, but many
employers struggle with HSA participation in their
workplace.

One of the reasons why employees are not

enrolling in and engaging with HSAs is due to the
misconceptions they have about how HSAs operate
and how they are meant to be used.

HSA education for employees is key to debunking

these misconceptions because it helps individuals:

b Understand the benefits of using these

Possible short accounts to save for healthcare expenses

call out can go b Effectively manage and invest these funds

in this space. for future retirement needs

b Feel empowered to make decisions and

get the most from their benefits

Let’s explore five common

misconceptions we’ve found
employees believe about HSAs.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 2

 Scenario #1

Misconception #1
HSAs are employer-owned
Employees may assume that HSAs are owned
by their employer, similar to flexible spending
accounts (FSAs). They’re concerned about not
having control over their account and losing their
HSA funds if they change jobs.

Alex
Alex opened an HSA when he

Truth
started his first job five years ago,
but he just accepted a job offer at a
new company. He’s worried he’ll lose
his HSA funds, but then his employer
HSAs are employee-owned tells him about HSA transfers. Alex
decides to leave his current HSA
Although employers may contribute to their open to use for long-term saving and
employees’ HSAs, all HSAs are employee-owned. open an HSA with his new company
Since the account belongs to the employee, they to use for his day-to-day medical
have control over how they spend their HSA funds spending needs. He’s excited to
and they retain ownership of their funds even if they have the opportunity to save for his
change jobs. retirement and have funds to spend
Employees will be more encouraged to enroll in an on his current medical expenses and
HSA when they understand the account is employee- prescriptions.
owned and stays with them through any job change.

Helpful Resource!
To help your employees understand
the differences between HSAs and FSAs,
take a look at our comparison chart.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 3

 Scenario #2

Misconception #2
HSAs are only for the wealthy
Since an employee needs to be enrolled in a
high-deductible health plan (HDHP) to open an
HSA, there is a common belief that HSAs are
only for people with higher incomes who can
afford these higher deductibles.

Emily
Emily used to think HSAs were

Truth
only for wealthy people, but after
learning about the HSA tax break,
she decided to open an HSA. After
having her first baby, she’s more
Anyone enrolled in a qualifying HDHP grateful than ever to have an HSA

(or HSA-eligible health plan) can open an HSA, account that provides a tax break
on newborn baby medical expenses
regardless of income level like thermometers and baby first-
aid kits.
In fact, HSAs can be particularly helpful for those with
lower incomes because they provide a tax break for
healthcare expenses. Participants are able to deposit
money into their HSA tax-free and their money is not
taxed when they spend it on eligible expenses, helping Examples of HSA
them lower their overall healthcare costs.
eligible expenses
Once employees understand that HSAs benefit everyone,
regardless of income level, HSAs won’t seem as b Blood pressure monitor
intimidating. Your employees will want to take advantage
b OTC products
of the opportunity HSAs offer to receive a tax break on
their everyday healthcare expenses. b Prescription drugs & medicine
b Sunscreen
Helpful Resource! b Vaccines and vaccinations

Your employees can learn about the wide

variety of eligible expenses they can use
their HSA funds on here.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 4

 Scenario #3

Misconception #3
HSAs are not a retirement
savings tool
Many employees think HSAs can only be used
for immediate healthcare expenses and that HSA
funds can’t grow over time. In fact, data from
Fidelity discovered that:

51% of Americans don’t think

HSA’s can be invested
Arthur
Arthur contributes to a 401(k) and an
IRA, but until recently he didn’t realize
the HSA his company offers can also
be used as a retirement savings and
investment tool. He decides to open

Truth
an HSA and contributes $4,000 into
each of these accounts: his family
HSA, 401(k), and IRA. He invests his

HSAs are a powerful retirement tool funds as well, with the return-on-
investment being 5 percent annually
for each account. His combined
Funds roll over from year to year and participants
federal and state tax rate is 25
can invest their funds. If employees choose to invest
percent, and his tax rate at the time
their HSA funds, they can potentially achieve faster
he distributes funds is 15 percent.
tax-free growth and build long-term savings for their
After 20 years, these were the
retirement needs.
balances in each account:
Unfortunately, most individuals with HSAs fail to take
advantage of these investment opportunities. The
Employee Benefit Research Institute (EBRI) found that
in 2021 only 12% of HSA account holders invested HSA: $206,000
their HSAs in assets other than cash. 401(k): $157,000
IRA: $139,000

Helpful Resource! He’s thrilled to find that the tax

Share our whitepaper on HSAs and advantages of an HSA combined
retirement with your employees. with his 401(k) and IRA have helped
him save thousands of dollars for
his retirement.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 5

 Scenario #4

Misconception #4
HSAs are use-or-lose accounts
Some participants think HSA and FSA rules are
the same, since they’re both used to pay for
healthcare expenses. This is especially true
when it comes to the use-or-lose rule. Fidelity
discovered that 44% of people who don’t have
an HSA think HSA participants need to spend
all of their HSA funds by the end of the year or

Lillian
those unused funds will be forfeited to the plan.

Lillian has been contributing to

both an FSA and an HSA for a few
years. She’s always kept her HSA
contribution on the lower end since

Truth
she assumed she’d lose unused
HSA funds at the end of the year.
But after reading some educational
materials on HSAs during open
HSAs are not subject to the enrollment, she realized the use-
“use it or lose it” rule or-lose rule only applies to her FSA.
Now she contributes the maximum
HSA funds can be carried over from year to year. Because amount to her HSA each year and is
HSAs can accumulate year-over-year and even be excited to see the significant growth
invested, the savings potential of HSAs is a major benefit in her savings.
for all participating employees. And since you don’t risk
losing funds at the end of the plan year, employees should
consider maxing out their HSA contributions (in line with
the IRS limits), to take full advantage of these accounts.

It’s important to communicate the distinction between the

FSA and HSA rules with your employees.

Helpful Resource!
Check out our toolkit to help your
employees prepare for open enrollment
and learn more about HSAs.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 6

 Scenario #5

Misconception #5
HSAs are only for chronic
health conditions
Some people may assume that HSAs are only
for individuals with chronic health conditions
because they require frequent medical care
and therefore have an increase in healthcare
expenses.

Manuel
Manuel used to think HSAs
were only helpful to people with
poor health, but after learning

Truth
about the triple-tax advantage
of HSAs, he decided to open
an account to use for everyday
Anyone with a qualifying HDHP medical expenses and save for
retirement healthcare. And when
can benefit from an HSA an unplanned minor surgery came
up, he was relieved to have extra
By contributing to an HSA, individuals can lower funds set aside to use towards his
their taxable income and save money on healthcare surgery expenses.
expenses. And if unexpected medical expenses do
come up in the future, HSA participants will have extra
funds set aside for these new needs.

If the message that HSAs can be beneficial for all

individuals, regardless of their health status, is
communicated to employees, they will be more
interested in opening and contributing to an HSA
account for both current and future medical expenses.

Helpful Resource!
Share these HSA insights
with your employees.

Clearing the Air: 5 HSA Misconceptions Many Employees Believe 7

WEX takes HSA education
off employers’ plates
Consumer Pathways delivers personalized HSA education that is timely, effective, and
tailored to the unique needs of each participant. Our goal is to empower individuals with
the knowledge they need to make informed decisions and optimize the use of their HSA.
And we minimize your workload by consistently engaging participants through tailored
messaging delivered through various channels.

The WEX benefits platform consists of one of the largest HSA databases in the industry,
giving us access to a vast data pool for conducting a powerful statistical analysis of
HSA participant behaviors. By using this data, we’re able to customize messaging for
your participants and increase their HSA engagement.

Consumer Pathways perks for employers Consumer Pathways perks for employees

Year-round automated messaging Personalized guidance to help maximize

value of their HSA

Increased adoption in HDHP/HSAs Greater HSA understanding

Analytics to help you understand Increased confidence in ability to pay

employee behaviors for healthcare

Employees understand their benefits, Enhanced portal and mobile usage

meaning fewer questions for you resulting in increased self-service

Transform your HSA experience

By putting your HSA education on autopilot with WEX,
you’ll save time, reduce administrative costs, and
ensure that your employees are getting the most
out of their HSAs.

Let’s get started