HSA & Benefits Explainer: How an HSA Works and How to Explain It to Employees

Most employees think they're choosing an HSA during open enrollment. They aren't. They're choosing a health plan, and some health plans come with the right to open and fund an HSA.

That distinction explains nearly every HSA mistake. Some people pick a high-deductible plan for the tax perks without checking what they'll pay at the doctor. Others skip a plan with a generous employer HSA deposit because "high deductible" sounds expensive.

Here is the short answer. An HSA is an account you own, funded with pre-tax or tax-deductible dollars, that pays for qualified medical expenses tax-free. It rolls over every year and moves with you between jobs. You can put money in only while you're covered by an HSA-eligible plan and meet a few other rules.

This HSA and benefits explainer covers:

• How the account works with the health plan.
• Who can contribute.
• What the tax benefits mean.
• What the money can pay for.
• How HSAs differ from FSAs.
• How to compare plans.

It also shows HR and benefits teams how to turn all of it into an employee explainer video that stays accurate year to year.

TL;DR Short answer: A Health Savings Account (HSA) is a tax-advantaged account you own and use for qualified medical expenses. You can contribute only while you're enrolled in an HSA-eligible health plan and meet a few other IRS rules. Unused money rolls over and stays with you if you change jobs.

Fastest way to explain it to employees: Turn an HR-approved script into a captioned explainer video with HeyGen. When limits or plan details change, regenerate the affected scene instead of reshooting.

• A live benefits session still works best for real-time questions during open enrollment.
• Your HSA administrator's videos cover generic account basics at no cost.
• A printed or PDF benefits guide remains the reference document employees keep.

What is an HSA?

A Health Savings Account is an individually owned, tax-advantaged account used to pay or reimburse qualified medical expenses for you, your spouse and your tax dependents. It is paired with an HSA-eligible health plan, often called a high-deductible health plan (HDHP), but the account and the insurance are separate.

It helps to be clear about what an HSA is not:

• It is not health insurance. The plan covers your care; the HSA holds money to pay your share.
• It is not an employer account. Once money goes in, including your employer's contributions, it belongs to you.
• It is not open to everyone with workplace coverage. Only certain plans qualify.
• It is not a tax-free account for any spending. Tax-free withdrawals apply to qualified medical expenses.

How does an HSA work with your health plan?

The fastest way to understand how an HSA works is to separate the two decisions inside it.

Then follow the money through a typical year:

• You enroll in an HSA-eligible plan during open enrollment or when you're hired.
• Money goes in through payroll deductions, personal deposits and any employer contribution.
• You get care and pay your share, often more of it up front until you reach the deductible.
• You pay from the HSA with an HSA debit card, or reimburse yourself later.
• What you don't spend stays in the account for next year and beyond.

Why HSAs are hard to explain in a benefits package

An HSA touches insurance design, federal tax law, payroll and personal finance in one decision. Employees hear about the "triple tax advantage" from personal-finance content, then open a benefits guide full of deductible and coinsurance tables, and struggle to connect the two.

Video fixes the ordering problem: plan first, eligibility second, account mechanics third, with one idea per scene. Once HR approves the wording, a corporate video maker like HeyGen turns that script into an employee-facing explainer with a presenter, narration, captions and your branding.

The tool produces the video, not the rules. Eligibility, contribution limits, qualified expenses and plan design still come from IRS guidance, your plan documents and your HSA administrator. The benefits team signs off before anything is generated.

Order matters more than polish. That ordering is what separates useful benefits communication from a feature list: employees need to know whether they can contribute before they care why an HSA is valuable.

Who can contribute to an HSA?

To contribute to an HSA, you generally must:

• Be covered by an HSA-eligible health plan.
• Have no other disqualifying health coverage, such as a general-purpose health FSA or a traditional low-deductible plan through a spouse.
• Not be enrolled in Medicare.
• Not be claimable as a dependent on someone else's tax return.

Some coverage does not disqualify you, including dental, vision, limited-purpose FSAs and certain other permitted plans. That's why "you can't have any other insurance" is an oversimplification.

Contributing and spending are different questions

Eligibility rules decide whether you can put money in, not whether you can take it out. If you switch to a non-HSA plan or enroll in Medicare, you stop contributing, but the existing balance is still yours and still pays for qualified medical expenses tax-free. Many HSA explainers blur this point, and employees approaching retirement are the ones who pay for the confusion.

What changed in 2026

Recent federal law expanded HSA eligibility. The IRS confirms that as of 2026, bronze and catastrophic plans available through an Exchange are treated as HSA-compatible. People in certain direct primary care arrangements can now contribute to an HSA and pay those fees from it.

In addition, an HDHP that covers telehealth before the deductible no longer loses its HSA eligibility. The bronze and catastrophic change mainly affects people who buy their own coverage, so employer plans still need to meet the standard HDHP tests.

HSA tax benefits, explained accurately

The "triple tax advantage" is real at the federal level, but it is three separate benefits:

• Contributions: Payroll contributions go in before federal income tax, and personal deposits are generally deductible. Employer contributions are generally excluded from your income.
• Growth: Interest and investment earnings inside the account aren't taxed federally while they stay there.
• Withdrawals: Money used for qualified medical expenses comes out federally tax-free.

Two caveats belong in every explainer:

• State taxes vary. A few states tax HSA contributions or earnings.
• Non-medical withdrawals cost more. Money withdrawn for non-medical expenses is taxed as income, plus an additional 20% tax if you're under 65 and not disabled. After 65, non-medical withdrawals are taxed like regular income, without the extra 20%.

HSA contribution limits for 2026 and 2027

These figures change every year, so treat them as a scene you update annually.

Employer contributions count toward the annual maximum. If your employer deposits $1,000 into a self-only HSA for 2027, you can add up to $3,500 yourself.

What can HSA money pay for?

HSA funds can pay for qualified medical expenses, including:

• Deductibles, copays and coinsurance.
• Prescriptions.
• Many dental and vision costs.
• A wide range of other care.

HealthCare.gov's guide to HSA-eligible plans walks through how those expenses connect to your deductible.

A few rules trip people up:

• Premiums usually don't qualify. Exceptions include COBRA coverage, health coverage while receiving unemployment benefits, qualified long-term care insurance within limits and certain Medicare premiums after 65.
• Expenses must come after the account is opened. Care you received before you set up your HSA doesn't qualify.
• There's no deadline to reimburse yourself. You can pay out of pocket now and reimburse yourself from the HSA years later, as long as you keep the receipt.

HSA vs. FSA: what's the difference?

HSAs and health FSAs both use pre-tax money for medical costs, but they work differently in several important ways.

Can you have an HSA and an FSA at the same time?

Not with a general-purpose health FSA, because it counts as disqualifying coverage. A limited-purpose FSA, which covers only dental and vision expenses, can sit alongside an HSA. Many employers offer one specifically for HSA participants.

How to compare an HSA-eligible plan with another option

Choose the plan first, then decide how to use the HSA. A simple way to compare plans is to calculate two numbers for each one: your cost in a light-use year and your cost in a worst-case year.

Cost in a light-use year: annual premiums + expected out-of-pocket care − employer HSA contribution.

Cost in a worst-case year: annual premiums + out-of-pocket maximum − employer HSA contribution.

Here is a hypothetical example for single coverage:

In this example, the HSA-eligible plan costs less in both scenarios, before counting any tax savings. Real plans can land differently. The math often flips in a few situations:

• The premiums are close.
• The employer HSA deposit is small or absent.
• The HDHP's out-of-pocket maximum is much higher.
• Someone needs frequent care and can't cover a large bill before the deductible.

Networks and cash flow matter too.

How to create an HSA & benefits explainer video with HeyGen

1. Gather the facts from four sources

Pull each type of fact from the right source:

• Eligibility and tax rules from IRS guidance.
• Plan details from your benefits guide and plan documents.
• Account features from your HSA administrator.
• The employer contribution amount from HR.

Note the source next to every claim. This takes about an hour if the benefits guide is final. Budget longer if plan design is still changing.

2. Script it in the order employees decide

Follow this sequence:

• What the plan covers.
• Who can contribute.
• How money goes in.
• What it pays for.
• What happens to unused money.
• How it differs from the FSA.
• Where to find plan-specific details.

Use the questions employees ask: "Do I pick the high-deductible plan only for the HSA?" "What will I pay at the doctor?" A 90-second overview runs about 200 to 230 spoken words.

3. Get benefits, legal or broker sign-off

Have the benefits owner review every line. Reviewers usually catch "anyone can open an HSA," "tax-free" without a qualifier and missing conditions on the employer contribution. Highlight lines that change yearly, such as limits and the employer deposit amount, so next year's update takes minutes.

4. Generate the video from the approved script

Paste the approved text into the editor. The script to video workflow splits it into scenes and adds narration, captions and supporting visuals, and it keeps the reviewed wording intact. A first draft of a 90-second explainer is ready to review within minutes. Most of your time goes into scene-level adjustments.

5. Make the two decisions visible on screen

Pick a presenter and voice, then build visuals around the concepts:

• A split screen of plan versus account.
• A money-flow graphic from paycheck to HSA to doctor.
• The limits table.
• The light-use versus worst-case comparison.

Put your HSA administrator's name and your benefits portal on the closing scene. Captions are generated automatically and stay synced to the narration for employees watching on mute.

6. Localize, publish and schedule the annual refresh

Publish to your benefits portal, intranet or LMS before open enrollment opens. For multilingual workforces, video localization translates, dubs and subtitles the same explainer into 177+ languages. Have a fluent reviewer check benefits terms like "deductible" and "coinsurance."

Next year, edit the limits and contribution lines and regenerate only those scenes.

Mistakes that make HSA explainers misleading

Selling the HSA before explaining the plan

Leading with investing and tax perks makes the HDHP sound automatically better. Show deductibles and out-of-pocket costs first, then the account.

Implying everyone with an HDHP can contribute

Medicare, a spouse's general-purpose FSA or a traditional plan can block contributions. Name the eligibility rules in the video, not only the plan type.

Saying HSA money pays for any health expense

Tax-free treatment applies only to qualified medical expenses. Premiums, for example, usually don't count.

Presenting one plan as the right choice

An employer explainer should teach the comparison, not make it. Show the light-use and worst-case math and let employees apply their own numbers.

Keep explainers modular: one video for the overview, with short follow-ups on eligibility, the FSA comparison and limits. That follows the same logic as most training content that has to stay accurate year after year.

Other ways to explain HSAs to employees

The AI route has trade-offs of its own:

• Costs take a cycle to learn. Credit usage varies by model and video length, so it takes a while to know what an explainer costs.
• The Free plan is for testing. It allows three videos a month of up to one minute each: enough to test an overview, not to run open enrollment.

Host a live benefits session

A benefits manager or broker presenting live lets employees ask about their own situation.

• Pros: Real-time answers to questions; personal and credible; easy to adapt on the fly; good for complex households.
• Cons: Employees who miss the session miss the explanation, and recordings are long and hard to update when limits change. Presenters also tend to phrase the rules slightly differently each time.

Share your HSA administrator's videos

Most HSA providers publish videos that explain their accounts.

• Pros: Free; reviewed by the provider; covers universal account rules; ready immediately.
• Cons: They can't show your plan's premiums, deductible or employer contribution, which are the numbers employees need to decide. The branding and emphasis belong to the provider.

Rely on the benefits guide

A PDF or printed guide remains the official reference.

• Pros: Complete; easy to search; required documentation anyway; simple to distribute.
• Cons: Dense tables and terminology are exactly where employees get lost, and few people read the guide end to end before choosing a plan. It explains the details without showing the decision.

The bottom line

An HSA is one of the most flexible benefits an employee can have, and one of the easiest to misunderstand. The fix isn't more detail. It's the right order: plan first, eligibility second, account third, with the employer's own numbers on screen.

When employees get that order, they stop asking "should I get the HSA?" and start asking a better question: "which plan costs me less, and how should I use the account that comes with it?" A two-minute explainer can get them there before the enrollment window closes.

You can build your first HSA overview on HeyGen's Free plan, which includes three videos a month of up to one minute each. The paid plans add more:

• Creator costs 24/month billed annually) and adds videos up to 30 minutes, 1080p export and watermark removal.
• Pro starts at $49/month and adds 4K export.
• Business costs $149/month plus $20 per additional seat. It adds workspace collaboration, draft commenting for benefits reviewers, and SCORM export and LMS integrations for publishing inside your learning platform.

Compare every plan on HeyGen pricing. Then send employees into open enrollment knowing exactly what they're choosing.

Frequently asked questions

Does HSA money roll over?

Yes. Unused HSA money rolls over every year with no forfeiture, unlike most health FSAs. The balance keeps growing, can often be invested and stays available for qualified medical expenses in future years, including in retirement, even if you're no longer eligible to contribute.

What happens to my HSA if I change jobs?

Your HSA stays with you. The account and everything in it, including past employer contributions, belongs to you. You can keep it with the current provider or move it to another. You can keep contributing only if your new coverage is HSA-eligible, but you can always spend the balance.

Can I use my HSA to pay health insurance premiums?

Usually not. Regular health insurance premiums aren't qualified HSA expenses. Exceptions include COBRA premiums, health coverage while receiving unemployment benefits, qualified long-term care insurance within limits and certain Medicare premiums after age 65. Using HSA money for other premiums triggers income tax and possibly a 20% additional tax.

Can I have an HSA and an FSA at the same time?

Only with the right type of FSA. A general-purpose health FSA counts as disqualifying coverage and blocks HSA contributions. A limited-purpose FSA, which covers dental and vision expenses, is compatible with an HSA. Check which FSA type your employer offers before enrolling in both.

Is it worth choosing a high-deductible plan to get an HSA?

Not automatically. Compare total costs first: premiums, expected care, the out-of-pocket maximum and any employer HSA contribution. The HSA-eligible plan often wins when premiums are much lower and the employer adds money, but frequent care or a much higher out-of-pocket maximum can change the answer.

Does my employer's HSA contribution count toward the annual limit?

Yes. Employer contributions count toward the same annual HSA maximum as your own. For 2027, the limit is $4,500 for self-only coverage and $9,000 for family coverage, plus a $1,000 catch-up at age 55 or older. Subtract the employer deposit to find your remaining room.

Written byNick Warner