Fungibility in workplace benefits choices: Evidence from Health Savings Accounts

Research Dialogue

What motivates higher education workers to select a high-deductible health plan paired with a Health Savings Account (HSA)—and how do they use their HSAs?


Because HSAs offer a triple tax advantage, account holders can increase their retirement security by financing current health care consumption through other means and leaving HSA funds to grow. Upon retirement, they can then take tax-free HSA withdrawals to reimburse themselves for past and current health care expenses. Executing this strategy, however, requires sufficient liquidity to finance current health care consumption and the financial literacy to maximize HSA benefits. This study examines how these and other conditions affect how HSAs are used in practice.

Key Insights

  • Most employees do not treat HSAs as long-term savings and instead use their HSAs to pay for current health care expenses with before-tax dollars.
  • Employees typically offset higher HSA contributions from their employer with lower contributions themselves.
  • The majority of employees do not know how, or even whether, their HSA funds are invested. 
  • Employees with greater financial literacy and liquidity are more likely to treat their HSAs as savings, but even most of this group does not. 
  • Employees tend to discount employer HSA deposits relative to cash and do not view HSA dollars as fungible with lower health insurance premiums. 

Few employees take full advantage of their HSAs’ long-term benefits, suggesting the need for more education, guidance and advice.


The authors surveyed 2,157 workers at 15 colleges and universities to gauge their HSA knowledge and usage. The survey measured respondents’ HSA contributions, account balance and withdrawal history; rationale for choosing a high-deductible health plan paired with an HSA; and awareness of HSA investment options.

Reasons for health insurance choices


Brent J. Davis

TIAA Institute

Adam Leive

University of California, Berkeley

Andrew Gellert

TIAA Institute

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