Why benefits advisors should revisit HSAs, FSAs and HRAs with clients

As employers prepare for the 2026 benefits cycle, rising health care costs are once again shaping the conversation. Premium increases continue to strain benefits budgets, forcing organizations to manage expenses while still offering competitive coverage.

For brokers, agents and benefits advisors, this environment presents an opportunity to broaden the strategic discussion. Beyond plan design and carrier negotiations, tax-advantaged health accounts - including health savings accounts, flexible spending accounts and health reimbursement arrangements - can play a meaningful role in helping employers control costs while maintaining strong employee benefits.

These accounts are often viewed primarily as tools to help employees manage out-of-pocket medical expenses. But they also provide important tax efficiencies that can reduce employer payroll costs and stretch benefits dollars further.

When advisors help employers structure and communicate these programs effectively, the result can be a benefits strategy that delivers financial advantages for both organizations and their workforce.

Turning health accounts into strategic, tax-efficient benefits

Account-based health plans offer a more efficient way to deliver benefits dollars by shifting compensation from taxable wages into tax-advantaged accounts. Employer contributions to HSAs and HRAs are generally exempt from federal income and payroll taxes, reducing overall tax liability while allowing employees to receive the full value. When employees contribute through Section 125 cafeteria plans, they also lower their own income and FICA tax exposure.

Although the per-employee savings may seem modest, they scale quickly across a workforce, turning these accounts into meaningful cost-management tools for both employers and employees.

Despite these advantages, many organizations, especially smaller employers, still underuse HSAs, FSAs and HRAs. The primary barrier is not value, but complexity. Differing rules, eligibility requirements and compliance considerations can create hesitation.

This is where advisors play a critical role. By simplifying plan design, guiding implementation and clarifying compliance, benefits professionals can help employers unlock the full financial and strategic value of these programs, often with far less administrative burden than expected.

Strategies that improve adoption

Successful account-based plans rely on thoughtful design and simple execution. Individual coverage health reimbursement arrangements are gaining traction as a way to control costs while giving employees flexibility to choose their own coverage. For HSAs, upfront employer contributions, rather than gradual funding, can increase employee confidence and encourage participation.

Even strong plan design falls short without clear communication. Many employees don’t fully understand how these accounts work, and that limits their adoption. Advisors can improve engagement by clearly explaining tax advantages, outlining key rules and using real-world examples. Employers that invest in ongoing education through enrollment support, FAQs, and simple resources consistently see higher participation and greater appreciation of these benefits.

Legislative changes expanding opportunities

Recent policy developments are also increasing the flexibility of tax-advantaged health accounts. The “One Big Beautiful Bill Act,” signed into law in July 2025, introduced several updates that took effect in early 2026. Among the most notable changes is the increase in the dependent care FSA contribution limit from $5,000 to $7,500 per household, the first significant adjustment in decades.

The legislation also expands HSA eligibility by allowing individuals enrolled in bronze and catastrophic marketplace plans to contribute to HSAs. In addition, HSA funds will be permitted for certain direct primary care membership fees within defined limits, and rollover provisions will make it easier to transfer balances from FSAs or HRAs to HSAs when employees switch to high-deductible coverage.

These changes create additional planning opportunities for brokers and advisors, helping employer clients evaluate their benefits strategies.

A strategic opportunity for advisors

Health care costs are unlikely to stabilize in the near future, meaning employers will continue searching for ways to deliver meaningful benefits without increasing expenses.

Tax-advantaged health accounts offer one practical path forward. When incorporated thoughtfully into a benefits strategy, they allow employers to reduce tax exposure, manage benefit spending and give employees greater control over their health care dollars.

For brokers and benefits advisors, the opportunity lies in helping clients recognize the full potential of these accounts. By combining smart plan design with clear employee education, HSAs, FSAs and HRAs can evolve from underused options into core components of a modern benefits program.

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Jerame DellaPenta is the director of service delivery and engagement at Nova Healthcare Administrators. Contact him at [email protected].