Employees Are Leaning on HSAs for Short-Term Expenses

Employees aren’t using health savings accounts (HSAs) to their full advantage, according to new data — findings that indicate that employers may want to step up education efforts around the accounts.

The vast majority of employees with an HSA (67%) said they used the accounts for out-of-pocket expenses from the past year or near term, according to a report from the Employee Benefit Research Institute (EBRI), a Washington D.C.-based nonprofit organization. Only 35% reported saving in their HSA for health care costs in retirement, and 28% said they had invested their account funds.

Meanwhile, 61% said they view their HSA as a savings account; 31% view it as an investment account; and 23% view it as a checking account, the report found.

Many industry experts tout HSAs as a smart way for employees to save for medical expenses, including in retirement, citing their triple tax benefits: Contributions are made pretax, the money in the accounts grows tax-free, and withdrawals for qualified medical expenses are also tax-free. More than 60% of employers offer an HSA, according to the 2025 SHRM Employee Benefits Survey. 

Overall, enrollment of HSAs has dipped slightly in the past year, falling to 15% in 2025 from 18% in 2024, according to EBRI.

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The findings showing that employees are taking more money out of their HSAs to pay short-term expenses rather than saving the funds reflect what’s happening on a broader level regarding angst over rising health costs.

“Even among people with private coverage, rising health care costs are affecting household budgets in very real ways,” said Paul Fronstin, EBRI’s director of health benefits research. “When higher health care costs lead people to cut spending, struggle with bills or reduce retirement contributions, it highlights how affordability shapes both access to care and longer-term financial security.”

Four in 10 said their health care costs increased in the past year, according to EBRI.

Health care costs have been on an upward trend, with data from consulting firm Mercer suggesting they might hit a 15-year high in 2026. Meanwhile, health care costs estimates for retirement have also grown, with Fidelity Investments finding that a 65-year-old retiring in 2025 can expect to spend an average of $172,500 in health care and medical expenses throughout retirement. 

Those figures are causing employees to worry: Data from the Kaiser Family Foundation recently found that paying for health care is currently Americans’ top financial concern, with two-thirds of Americans saying they are very or somewhat worried about affording health care, outranking concerns about paying for groceries, utilities, or housing costs.

Related Article: What To Know About Health Care Costs in 2026

Boosting Education 

The data indicating that many employees are not utilizing HSAs for long-term health savings is perhaps more proof that employers offering HSAs need to improve education on these benefits and how to best take advantage of these accounts. Investing HSA funds, for instance, can allow funds to grow rather than sitting as cash.

“The biggest opportunity for HSAs this year is closing the education gap at scale,” said Shobin Uralil, cofounder and chief operating officer of Lively in New York City.  Employers should “proactively educate employees on how HSAs work, from contributions and investments to long-term savings,” he said.

That’s a sentiment some in the benefits industry have been sharing over the past several years. 

“Employers need to do a much better job helping employees understand how to best manage and use their HSA to maximize their dollars,” Larry Maistelman, a health and welfare consultant at Grand Forks, N.D.-based financial services firm Alerus, said last summer at SHRM25 in San Diego, adding that companies can involve their 401(k) providers to help educate employees about HSA investing.