Your organization offers health savings accounts and flexible spending accounts. You've done the administrative work, sent the enrollment emails, and provided the plan documents. Yet when enrollment closes, participation rates remain disappointingly low.
Only 9% of HSA account holders invest any portion of their funds, and FSA participation figures suggest millions of eligible employees never enroll. This represents a significant missed opportunity, both for employees who could save thousands in taxes annually and for employers whose benefits investments fail to deliver expected returns on engagement and retention.
The challenge isn't your benefits offering. The challenge is how these benefits are communicated, understood, and valued by your workforce.
Understanding the participation gap: what the data reveals
American households collectively place over $100 billion in estimated spending through HSA and FSA contributions, demonstrating substantial market adoption. Yet this figure masks significant disparities in participation rates across organizations.
HSA balances rose 19% in 2024, reaching nearly $147 billion, with the number of accounts growing 5%. While growth continues, the pace has moderated, suggesting market saturation among early adopters while vast segments of eligible employees remain unengaged.
Even more concerning: households contribute an average of $3,030 per year to HSAs and $2,250 annually to FSAs, well below maximum contribution limits. This suggests participants aren't optimizing their tax savings potential even when they do enroll.
The real cost of low participation
Low enrollment rates create multiple organizational challenges. Administrative expenses for HSA/FSA programs remain constant whether enrollment is 30% or 80%, meaning low participation drives higher per-participant costs. More critically, 76% of employees who understand their benefits report happiness, and 82% stated understanding benefits would increase their sense of stability. When employees don't engage with offered benefits, your total compensation package loses perceived value.
Employees satisfied with their benefits are 26% more likely to exceed expectations and 13% more likely to continue employment for over three years. An employee contributing the full 2026 HSA family limit of $8,750 could save approximately $2,187 in federal taxes, plus FICA savings. When multiplied across your workforce, this represents substantial unrealized value.
The behavioral economics of benefits decisions
Traditional benefits communication treats enrollment as a rational decision-making process: provide information, employees evaluate options, optimal choices follow. Research demonstrates this assumption fundamentally misunderstands how people make benefits decisions.
Default bias dominates decision-making: Employees facing complex choices often default to the status quo. If HSA/FSA enrollment requires active selection, many will simply skip it rather than invest cognitive effort in evaluation.
Loss aversion creates FSA anxiety: The fear of forfeiting $500 to the "use it or lose it" rule weighs more heavily than the appeal of $1,200 in tax savings. FSA communication focusing primarily on tax benefits while inadequately addressing forfeiture concerns fights against fundamental human psychology.
Information overload triggers avoidance: By the time employees reach HSA/FSA decisions during open enrollment, they've already processed medical plan options, dental coverage, vision plans, and life insurance. Mental depletion makes them more likely to skip optional elections.
Effective enrollment strategies must account for these behavioral realities rather than assuming rational economic decision-making.
Communication frameworks that drive enrollment
Effective benefits communication improves engagement while increasing employee satisfaction and retention. However, most organizations default to information-heavy approaches that fail to motivate action.
The "moments that matter" framework
Rather than generic benefits education, align communications with specific life events when HSA and FSA value becomes immediately relevant:
New parent scenario: "Planning for a baby in 2026? Your FSA can cover prenatal vitamins, breast pumps, lactation consultants, and even your doula. Average savings: $2,100 in taxes on typical pregnancy-related expenses."
Chronic condition management: "Managing diabetes? Your HSA covers glucose monitors, test strips, insulin, and even continuous glucose monitoring systems. Contributing $4,400 could save you $1,100 in taxes on expenses you're already paying."
Orthodontic treatment: "Braces for your teenager? Orthodontics is FSA-eligible. Contributing $3,400 could reduce your out-of-pocket costs by $850 in tax savings alone."
This approach transforms abstract benefits into concrete solutions for real problems, dramatically increasing relevance and motivation.
The "show, don't tell" principle
Replace technical explanations with visual, scenario-based education:
Instead of: "HSAs offer triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses."
Try: "Meet Sarah. She contributes $300/month to her HSA. After 20 years of 7% average returns, she'll have $154,000 tax-free for retirement healthcare costs. That's $72,000 in contributions growing to $154,000, completely tax-free."
Visual aids, infographics, videos, interactive calculators, make complex information accessible and engaging for employees with varying learning styles.
Multi-channel, year-round engagement
Using multiple communication channels ensures messages reach all employees. Year-round communication maintains awareness and prevents the "out of sight, out of mind" problem that plagues annual-only benefits education.
Pre-enrollment phase: Educational email series, benefits webinars, manager toolkits, and intranet resources.
Active enrollment phase: Personalized contribution recommendations, interactive calculators, one-on-one counseling, and daily reminders.
Post-enrollment phase: Welcome packets, tutorial videos, quarterly balance reminders, and eligible expense campaigns.
Proven enrollment tactics that increase participation
Beyond communication strategy, specific tactical interventions demonstrably improve HSA/FSA adoption rates.
Smart defaults and friction reduction
While you cannot automatically enroll employees without their consent, you can reduce enrollment friction:
Pre-populate contribution amounts: Rather than presenting a blank field, show suggested contribution amounts based on plan type, salary band, or prior year elections. 54% of FSA holders determine contributions based on anticipated healthcare costs, compared to just 32% of HSA holders, suggesting many need guidance on appropriate contribution levels.
Streamline the enrollment process: Every additional click or field reduces completion rates. Simplify your enrollment interface, minimize required inputs, and provide contextual help without requiring navigation away from the enrollment screen.
Offer employer contributions or matches: HSA holders are nearly 75% more likely to have employer contributions than FSA holders. Employer contributions dramatically increase participation by providing immediate, tangible value that makes enrollment feel less risky.
Technology-enabled engagement
Modern benefits administration technology transforms enrollment from a compliance exercise into an engaging experience.
AI-powered recommendation engines: Analyze employee demographics, past utilization, and healthcare consumption patterns to suggest optimal contribution levels for individual employees.
Interactive decision support tools: Calculators that show real-time tax savings based on contribution amount, family size, and income level make abstract savings concrete.
Mobile-optimized enrollment: Mobile-responsive design ensures employees can enroll from any device, removing location and timing barriers.
Technology-first solutions are winning the benefits industry because they meet employees where they are with tools that simplify complex decisions.
Addressing the FSA forfeiture fear factor
FSA enrollment rates consistently lag HSA participation, primarily due to "use it or lose it" anxiety. Strategic communication can neutralize this barrier.
Reframe the conversation
Lead with utilization success stories: "Last year, our employees contributed over $1.2 million to FSAs and forfeited less than 2%. Here's how they did it."
Quantify the risk accurately: "Even if you forfeit the maximum carryover amount of $680, you'd still save $170 in taxes compared to paying with after-tax dollars. The tax savings significantly buffer against potential loss."
Provide concrete expense planning tools: Interactive planning tools that sum predictable expenses (prescriptions, copays, glasses, contacts, dental work) help employees set appropriate contribution levels with confidence.
Enable year-end spending
Create proactive systems that help employees utilize FSA balances:
Quarterly balance statements: Don't wait until December to inform employees about unused balances. Quarterly reminders with spending suggestions maintain awareness throughout the year.
Eligible expense campaigns: Monthly emails highlighting lesser-known eligible expenses (sunscreen, first aid supplies, menstrual products, sleep apnea devices) provide actionable spending ideas.
Year-end spending events: Partner with vendors offering FSA-eligible products for end-of-year shopping events, making it easy for employees to utilize remaining balances.
HSA education: from medical account to retirement vehicle
Only 9% of HSA accounts had invested a portion of their dollars by the end of 2024, despite HSAs offering triple tax advantages and unlimited rollover potential. This represents the single largest missed opportunity in tax-advantaged benefits.
Repositioning HSAs strategically
Most employers position HSAs as "that thing required for high-deductible health plans." Strategic organizations reframe HSAs as powerful long-term savings vehicles:
The retirement healthcare account: Fidelity estimates that a 65-year-old couple retiring today needs approximately $315,000 for healthcare costs throughout retirement. HSAs uniquely address this need with tax-free growth and withdrawals.
The calculation that changes minds: Show employees this scenario: Contributing $8,750 annually to a family HSA from age 40 to 65, with 7% average returns, results in approximately $655,000 available tax-free for retirement healthcare expenses. This concrete projection makes HSA value tangible.
The investment conversation: Partner with financial advisors to provide HSA investment education. Many employees don't realize HSA funds can be invested similarly to 401(k) accounts. The average total balance of $22,032 for HSA investment accounts is nearly nine times larger than an average funded non-investment holder's account balance.
The Clarity Benefit Solutions advantage: technology-enabled participation
Maximizing HSA/FSA participation requires more than good intentions, it requires comprehensive benefits administration solutions that make enrollment intuitive, education engaging, and administration effortless.
Clarity Benefit Solutions delivers purpose-built tools that address every participation barrier:
Intelligent enrollment platforms: Guided enrollment experiences that recommend optimal contribution amounts based on individual employee profiles, reducing decision paralysis and increasing participation.
Automated communication engines: Personalized, multi-channel communication campaigns that deliver the right message to the right employee at the right time, eliminating manual campaign management while improving relevance.
Real-time analytics dashboards: Track participation rates, contribution levels, and engagement metrics in real-time, enabling proactive intervention when participation lags.
Mobile-first design: Enrollment and account management optimized for mobile devices, meeting employees where they naturally engage with information.
Integrated compliance management: Automated compliance monitoring and documentation, including coordination with other benefits like COBRA administration, ensuring your HSA/FSA programs meet all regulatory requirements.
Beyond technology, Clarity provides strategic consultation on communication strategy, campaign design, and best practices implementation. Our clients consistently achieve participation rates 20-35% higher than industry averages through this combination of superior technology and strategic support.
Taking action: your next steps
The 2026 benefit limit increases create a perfect moment to re-energize your HSA/FSA communication strategy. HSA contribution limits of $4,400 (individual) and $8,750 (family) provide compelling new savings opportunities to highlight. The FSA contribution limit of $3,400 enables meaningful tax savings for employees with predictable medical expenses.
Maximizing HSA/FSA participation requires strategic planning implemented well before your enrollment window opens:
Audit your current state: Analyze existing participation rates, contribution levels, and forfeiture rates to establish baseline metrics.
Segment your workforce: Identify distinct employee populations with different benefits needs and communication preferences.
Develop targeted campaigns: Create personalized messaging for each segment, focusing on life situations where HSAs/FSAs deliver maximum value.
Assess your technology: Evaluate whether your current benefits administration platform supports the engagement, personalization, and analytics capabilities required for optimal results.
Build your communication calendar: Map out year-round touchpoints, not just open enrollment communications.
Why Clarity makes a difference?
The difference between average and exceptional HSA/FSA participation often comes down to having the right tools and expertise supporting your enrollment strategy.
Schedule a demo with Clarity Benefit Solutions to discover how our automated enrollment technology, personalized communication engines, and strategic consultation transform HSA/FSA participation rates.
In your demo, you'll see:
Live platform demonstration: Experience our intelligent enrollment interface that guides employees through optimal contribution decisions.
Communication automation: See how automated, personalized campaigns engage employees throughout the year without consuming your team's time.
Analytics capabilities: Explore real-time dashboards that reveal exactly where your participation strategy succeeds or needs refinement.
ROI projection: We'll analyze your current participation rates and project the impact of implementing Clarity's solution.
Don't let another enrollment period pass with suboptimal participation rates. Your employees deserve benefits they understand and value. Your organization deserves technology that makes benefits administration a strategic advantage rather than an administrative burden.