Key takeaways:
- Health Savings Accounts (HSA) and Health Payment Accounts (HPA) solve different problems: one helps your employees build long-term healthcare savings, while the other gives them immediate, interest-free spending power.
- HSAs require enrollment in a high-deductible health plan (HDHP), while you can offer HPAs to eligible employees regardless of their health plan.
- When you pair an HSA with an HPA, you can help boost HDHP adoption, reduce deferred care, and stretch your benefits budget further.
- Real-world results back this up: Intermountain Health grew HSA enrollment from 6% to 80% and saved $10.5 million annually, while R.R. Donnelley helped employees cover over $1 million in expenses through HPAs.
Healthcare affordability is one of the biggest challenges facing you and your workforce. You may want to help employees manage rising costs while being mindful of your benefits budget. That means getting creative – and strategic – with the accounts you offer.
Two tools that can help are HSAs and HPAs. Both help your employees pay for healthcare, both are employer-sponsored, and both can reduce financial stress.
While these accounts have similar goals, there’s an important difference: HSAs help employees save and invest in healthcare expenses, while HPAs help them pay for costs they’re facing right now.
Understanding how each works, who’s eligible, and when you might offer them can help you build a benefits package that supports your employees at every stage of their healthcare journey.
What is a Health Savings Account?
This is a tax-advantaged account that lets eligible employees set aside money for qualified medical expenses, both now and in the future.
Unlike accounts that reset each year, HSA funds belong to the employee and roll over indefinitely. That means your employees can use an HSA for today’s healthcare expenses while also building savings for the future.
How does an HSA work?
Your employees can contribute pre-tax dollars to their HSA through payroll deductions, and you can add employer contributions to help them build their balance faster.
HSAs are never taxed at the federal income tax level when used appropriately for qualified medical expenses. Most states offer similar tax treatment, with limited exceptions.1 What makes HSAs so valuable is the triple-tax advantage: tax-free contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.3
We know from HealthEquity’s Spring 2026 Healthcare Affordability Pulse that HSA holders are 36% more likely to feel prepared for planned healthcare expenses and 31% more likely to have $500 or more saved for emergencies compared to those without an HSA.
How can you save, spend, and invest with an HSA?
Your employees can access their HSA funds in several ways. Many use an HSA debit card to pay for eligible expenses directly at the point of care, from prescriptions to dental visits. Others choose to pay out of pocket and reimburse themselves later.
But an HSA can do more than help employees pay today’s bills. Once employees build a sufficient balance, they may choose to invest a portion of their funds.2
That long-term growth potential can also make an HSA a powerful complement to retirement planning, especially as healthcare costs often rise later in life.
Additionally, HSAs are portable and can move with the employee as they change jobs. The funds belong to the employee, and can continue to help them save for healthcare, pay for out-of-pocket expenses, and invest in their health.
Who is eligible for an HSA?
To contribute to an HSA, your employee must be enrolled in an HSA-qualified high-deductible health plan (HDHP). They also can’t be enrolled in Medicare, claimed as a dependent on someone else’s tax return, or covered by a general-purpose healthcare Flexible Spending Account (FSA).3
Employees who meet these requirements can open and contribute to an HSA, either through their employer or on their own.
What is a Health Payment Account?
This is an employer-sponsored benefit that gives your employees immediate, interest-free access to funds for out-of-pocket healthcare costs.
HPAs help bridge the gap between when a medical bill arrives and when your employee can comfortably pay it. HealthEquity offers HPAs as part of our partnership with Paytient.4
How does an HPA work?
Employers set a credit limit that eligible employees can draw on for medical, dental, vision, pharmacy, and even veterinary expenses. When a bill comes due, employees use their HPA card to pay for it. They can repay the balance over time through payroll deduction, a bank account, or even their HSA.
There is no interest and no hidden fees. Your employees simply repay what they spend on manageable installments that fit their budget.
How can an HPA help employees manage healthcare costs?
Instead of choosing between getting the care they need and managing their finances, your employees have another way to pay for unexpected healthcare expenses.
An HPA can also help employees protect their HSA savings. Instead of draining their HSA to cover an unexpected bill, they can use their HPA first and give their HSA funds more time to grow.
HPAs are also a helpful alternative to hospital or provider payment plans. Traditional payment plans can often come with high interest rates or penalties, while HPAs are interest free.5
Who is eligible for an HPA?
Unlike an HSA, an HPA doesn’t require your employees to enroll in a specific health plan. As an employer-sponsored healthcare payment account, you determine eligibility. That means you can typically offer an HPA to benefits-eligible employees regardless of which health plan they choose.
That flexibility can help you reach employees who might not otherwise have a financial cushion for healthcare costs.
What is the difference between an HSA and an HPA?
Both accounts can help you make healthcare more affordable for your employees, but they solve different problems.
Here’s a side-by-side comparison:
| Health Savings Account (HSA) | Health Payment Account (HPA) | |
|---|---|---|
| Purpose | Long-term savings and investment for qualified medical expenses | Short-term, interest-free payment tool for out-of-pocket costs |
| How funds work | Pre-tax contributions that roll over and can be invested | Revolving line of credit, repaid in installments |
| Eligibility | Requires enrollment in an HSA-qualified HDHP | Available to eligible employees regardless of health plan |
| Employer role | You may contribute funds directly to the account | You pay a simple subscription fee to offer the benefit |
| Affordability impact | Helps employees build savings for current and future healthcare needs | Helps remove the immediate financial barrier to seeking care |
Why might you offer an HSA, an HPA, or both?
Should you offer an HSA, an HPA, or both?
The answer comes down to the specific affordability gaps you’re trying to address within your workforce.
How can an HSA help your employees?
If your employees can build a balance over time, an HSA can help them create a financial cushion for healthcare expenses while offering tax advantages and long-term growth potential.
In Intermountain Health’s case, it shows what you can accomplish with a well-designed HSA strategy. After introducing front-loaded contributions and a strong employer match, the healthcare system grew HSA enrollment from just 6% to 80%. And 99% of members actively contributed, with average balances exceeding $5,600.
How can an HPA help your employees?
An HPA can help your employees manage out-of-pocket healthcare costs while also giving them more flexibility when choosing a health plan. A Paytient study found that 34% of employees with access to an HPA would consider switching to a lower-premium plan. Separate research found that 40% of employees opted into an HSA-qualified health plan when an HPA was offered alongside it.
R.R. Donnelley’s experience shows how an HPA can help employees manage healthcare expenses. Since 2022, its employees have used HPAs to cover more than $1 million in expenses.
For you, that means adding an HPA could also help drive HDHP and HSA adoption.
Ultimately, you don’t necessarily have to choose between an HSA and an HPA. They address healthcare affordability from two different angles. An HSA can help your employees build resources for future healthcare expenses, while an HPA can make costs more manageable today.
Building a more affordable benefits package
You might not be able to solve healthcare affordability with a single benefit. Your employees have different financial needs at different times. Some are focused on building savings for the years ahead. Others need help covering a healthcare bill this month.
That’s why HSAs and HPAs can play distinct but complementary roles in your benefits strategy. An HSA can help your employees save and invest in healthcare over the long term, while an HPA can give them immediate access to funds when they need care.
Together, these accounts can help you close affordability gaps while supporting a healthier, more financially confident workforce.
Ready to explore what’s right for your organization? Learn more about HealthEquity HSAs or HPAs.
