Supporting financial wellness with HSAs and FSAs

According to a 2024 financial wellness survey, 86% of full-time employees are worried about their finances. Meanwhile, other research indicates that financial concerns adversely impact employee sleep, mental health, self-esteem, physical health, and relationships at home. Unfortunately, employee concerns about finances often trickle into the workplace, making workers more distracted, less engaged, and more likely to seek a higher-paying job. That's reason for concern — and reason for employers to take action.

Employees have expressed a growing desire to improve their financial literacy and knowledge, and they want help from employers to achieve this goal. In fact, according to one survey, employee interest in financial wellness jumped from 17% in 2023 to 35% in 2024. Improving employee financial wellness is a critical need that employers and HR teams are uniquely qualified to address through their benefit plans, and with a multigenerational workforce, there's no shortage of topics. 

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Among the employer-sponsored benefits that can support financial goals across all generations you will find the flexible spending account (FSA) and health savings account (HSA). The immediate tax advantages these accounts offer, and their ability to cover a wide range of health-related expenses, make them desirable and effective tools in a company's — and an employee's — financial wellness toolkit. 

But to ensure that employees get the most value from their tax-preferred investments, frequent and ongoing education both in the workplace and through resources that reach employees and their partners or spouses at home. Resources like webinars, seminars, articles, and links to tools can help employees in the following ways:

Saving money on taxes
FSAs and HSAs reduce state and federal taxable income for participating employees. Plus, employees can save an average of 30% by using pre-tax dollars to pay for eligible expenses for themselves and their qualifying children or dependents. Consider directing employees to interactive tools like savings calculators to assess how an FSA or HSA can put more money in their pockets.

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Bridging the gaps in healthcare coverage
Participants can use their FSA or HSA to cover copays, deductibles, and coinsurance. In 2025, employees can contribute up to $3,300 to an FSA and up to $4,300 for an individual HSA or $8,500 for families. If your organization offers an FSA or an HSA with a qualifying high-deductible health plan, employees can use these accounts to bridge the gaps between what your company-sponsored health plan covers and the cost of services and products they need on a daily basis. Telehealth services are a good example of how employees can use tax-free FSA and HSA funds to pay for services that might not be covered by the health plan, or that may not be covered until after the deductible is met.

Making healthcare products and services more affordable
Almost 30% of workers put off medical procedures and healthcare needs in 2023 because they could not pay for these expenses. FSAs and HSAs can help cover the cost of medical, dental, and mental health services and allow employees to save money on everyday healthcare costs, such as: 

• Vision care, including eye exams, glasses, contacts, and prescription sunglasses
• Over-the-counter medications, first aid kits, and bandages
• Menstrual care products and birth control pills
• Telehealth services, including mental health counseling, weight loss, fertility treatments, diagnostic testing, personalized allergy treatments, acne treatments, custom orthotics, and more
• Crutches, braces, pain relief devices, deep tissue massagers, and kinesthetic tape
• High-tech monitoring and diagnostic devices and wearables
  

It's been estimated that the average household spends $1,600 each year on wellness products that are FSA and HSA eligible. Helping employees understand how they can use pre-tax funds to pay for those expenses can be a key savings strategy. Direct employees to resources such as comprehensive FSA and HSA eligibility lists to help them discover the range of products and services available to them.  

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Whether your organization offers an FSA or an HSA, be sure to educate employees about the basics of these accounts, and how they differ. For example, in most cases, employees can choose either an HSA or an FSA, but not both (with some exceptions). HSAs must be attached to an eligible high-deductible health plan (HDHP). Unlike FSAs, HSAs do not expire at year end. They continue to grow, much like a 401(k), and employees can use them as part of a long-term investment and retirement strategy. 

Early-stage employees can make big gains with an HSA because their healthcare costs are often low, allowing the account balance and any investments to compound over time. For seasoned employees, HSAs offer a catch-up feature, allowing those over 55 to contribute an extra $1,000 per year, increasing their financial security in retirement.  

Financial literacy is an essential skill for today's workforce and 75% of employees say they want to work for a company that cares about their financial wellbeing. Employers are listening, with 97% reporting that they feel responsible for employee financial wellness. HR teams can do their part by helping employees make informed decisions about FSAs and HSAs and providing year-round guidance on effective utilization so employees feel more financially confident.