5 HSA Myths

This year marks the 20th anniversary of HSAs (Health Savings Accounts), and today we are celebrating National HSA Awareness Day (October 15) by debunking some common myths about HSAs.

HSAs have been around for two decades, but how much do you know about this benefit and how it can help?

Here are five HSA myths many employees believe:

Myth: HSAs are employer-owned.

  • Consumers 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.

Fact: HSAs are employee-owned.

  • Although employers may contribute to their employees’ HSAs, all HSAs are employee-owned. Since the account belongs to the employee, they have control over how they spend their HSA funds and they retain ownership of their funds even if they change jobs.

  • Consumers will be more encouraged to enroll in an HSA when they understand the account is employee-owned and stays with them through any job change.


Myth: 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.

Fact: Anyone enrolled in a qualifying HDHP (or HSA-eligible health plan) can open an HSA, regardless of income level.

  • 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 them lower their overall healthcare costs.

  • Once employees understand that HSAs benefit everyone, regardless of income level, HSAs won’t seem as intimidating. Participants will want to take advantage of the opportunity HSAs offer to receive a tax break on their everyday healthcare expenses.


Myth: HSAs are not a retirement savings tool.

  • Many consumers 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 HSAs can be invested.

Fact: HSAs are a powerful retirement tool.

  • Funds carryover from year to year and participants can invest their funds. If participants choose to invest their HSA funds, they can potentially achieve faster tax-free growth and build long-term savings for their retirement needs.

  • 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 their HSAs in assets other than cash.¹


Myth: HSAs are use-or-lose-accounts.

  • Some consumers 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 those unused funds will be forfeited to the plan.¹

Fact: HSAs are not subject to the "use it or lose it" rule.

  • HSA funds can be carried over from year to year. Because HSAs can accumulate year-over-year and even be invested, the savings potential of HSAs is a major benefit for all participants. And since you don’t risk losing funds at the end of the Plan Year, participants 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 participants.


Myth: 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.

Fact: Anyone with a qualifying HDHP can benefit from an HSA.

  • By contributing to an HSA, individuals can lower their taxable income and save money on healthcare 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 consumers, they will be more interested in opening and contributing to an HSA account for both current and future medical expenses.


Learn more about HSAs by clicking the link below!

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No part of this website is tax, financial, or legal advice. You should consult your own legal and tax advisers regarding your personal situation and whether this is the right program for you.

¹Sources: Wex