Year End HSA and FSA Reminders and Planning for 2026

Are your employees leaving money on the table?

Last year, American workers forfeited millions of dollars in healthcare savings simply because they didn’t maximize their Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). For HR professionals, that means valuable benefits are underutilized, and employees aren’t leveraging the full value of their total rewards.

FSAs and HSAs are powerful tools designed to reduce healthcare costs and lower an employee’s taxable income, but only if they’re used strategically. By helping employees understand how to make the most of these accounts, HR leaders can improve both financial well-being and benefits engagement.

2026 Contributions Limits You Need to Know

The IRS has announced higher contribution limits for 2026, reflecting the continued rise in healthcare costs and the growing importance of tax advantaged savings. Employees can now contribute up $3,300 to a health FSA and up to $4,400 (individual) or $8,750 (family coverage) to an HSA according to recent updates from Fidelity and IRS Guidance.

These figures are just the starting point. Your employee benefits plan design, carryover rules, and whether a health plan qualifies for HSA contributions all shape what’s available. HR teams play a key role in making sure these changes are clearly communicated to their organization’s employees.

Why Many Miss Out

Despite the advantages, only 37% of Americans currently have an FSA or HSA. Even among those who do, more than half of accounts hold balances under $50.

Recent findings from the Employee Benefits Research Institute (EBRI) reveal that 65% of HSA participants use their accounts mainly for short-term healthcare costs rather than saving for long-term expenses or retirement. This pattern limits the full potential of HSAs as long-term financial wellness tools.

Confusion about eligible expenses also contributes to this gap. Many workers don’t realize these accounts cover not just prescriptions and copays, but also over-the-counter medications, dental and vision care, and even wellness products, leading to widespread underutilization.

Clear communication is key and that starts with helping employees understand how FSAs and HSAs differ, and which one best fits their needs.

FSA vs. HSA: Know the Difference

While both accounts offer tax advantages, they work differently.

FSAs deliver immediate savings but often require employees to “use it or lose it” each year, though some plans carryover of up to $600 in 2026. HSAs, on the other hand, roll over indefinitely, can be invested for long-term growth, and remain with employees even if they change jobs. The tradeoff is that HSAs require enrollment in a high-deductible health plan.

HR leaders who clearly communicate these differences and the key benefits of each account type can help employees choose the account that best fits their situation.

5 Strategies to Maximize Accounts

Employees can make the most of their FSAs and HSAs by:

1. Estimating conservatively to avoid overfunding FSAs and forfeiting unused dollars.
2. Spending strategically throughout the year on known expenses like prescriptions, glasses, or dental care.
3. Understanding plan rues, including grace periods or carryover provisions.
4. Prioritizing HSAs where possible, given their triple tax advantage and long-term growth potential.
5. Staying informed with updates from HR, such as eligible expense reminders and account balance alerts.

For HR teams, reinforcing these strategies through clear, ongoing communication can dramatically improve employee engagement with these accounts.

Taking Action Now

Now is the time to review 2026 healthcare needs, adjust contributions levels, and make a plan to use every dollar that may expire wisely before 2025 comes to a close.

Promoting proactive FSA and HSA use is an opportunity to strengthen engagement and demonstrate care for employee’s financial well-being.

Connect with your AssuredPartners advisor to explore ways to best communicate how you can help your employees maximize these accounts and ensure your benefits strategy delivers real value in 2026.