Educating Employees on Pre-Tax Benefits: From Payroll Deductions to Tax-Advantaged

75% of employees enroll in health benefits when they’re offered. But what about the other 25%, or those missing out on pre-tax savings in HSAs, FSAs, or commuter benefits?

The truth is, your benefits are only as valuable as your employees’ ability to use them. Higher participation helps employees save on taxes, but it also reduces an employer’s benefit costs through better risk pooling, lower premiums, and more efficient use of employer contributions.

Still, many employees don’t take full advantage of what’s available, often because they don’t understand it. This guide breaks down the importance of increasing benefits adoption and gives actionable strategies to educate employees on pre-tax benefits. 

7 pre-tax benefits communication strategies

Maximize participation in your pre-tax benefits program by using the following strategies to keep your employees informed about your latest offering: 

1. Use multiple communication channels 

Your employees are busy, and they won’t all view your benefits communications in the exact same place. Try using multiple communication channels to meet your workers where they’re already spending their day. You might use a combination of the following to spread the word effectively:

• Email series from HR 
• Updates in your employee handbook 
• Monthly town halls or team meetings 
• Regular benefits drop-in sessions with HR to answer questions or receive feedback 
• Dedicated Slack channel 
• Newsletter inclusions 
• Posters in your office 
• Information in your job descriptions and on your company careers pages 

2. Personalize your benefits communication 

While it’s important to use multiple communication channels to reach employees, personalization is key to making benefits feel relevant and valuable. Employees have different financial situations, health needs, and life priorities, so a one-size-fits-all approach won’t maximize engagement.

Personalize your benefits communications by: 

• Segmenting your messaging: You might group employees by demographics (age, family status, or job role) and tailor your messaging accordingly. For example, younger employees might need 401(k) basics, while parents may be more interested in Dependent Care FSAs.
• Use real-life scenarios: Consider showing employees how benefits apply to their specific situations. For example, you might show a parent how an HSA helps cover medical costs for their family.
• Offer self-service tools: Provide employees with benefits calculators and decision-support tools to give them the best options based on their circumstances.

3. Offer illustrative examples of benefits at different income levels 

Providing concrete, real-world examples helps employees understand how pre-tax benefits impact their pay. Use easy-to-follow breakdowns to show the savings at different salary levels.

For example, you might illustrate how an employee earning $50,000 vs. $100,000 would benefit from participating in a Health Savings Account (HSA), which might look like this: 

Some key details to include are: 

• How much employees save on taxes by contributing to pre-tax benefits
• The impact on their take-home pay with vs. without participation
• Employer contribution match (if applicable) and how it boosts their overall compensation

4. Host educational workshops 

Many employees learn best through interactive discussions rather than reading emails or policy documents. Virtual or in-person workshops provide a valuable opportunity for employees to engage with benefit options, ask questions, and fully understand how pre-tax benefits can work for them.

To make your employee education workshops effective, keep them engaging, interactive, and accessible for all employees. Some ideas include: 

• Using visual and real-life examples: Employees are more likely to understand concepts like pre-tax deductions and tax savings when they see them in action. Try including charts, infographics, and side-by-side comparisons of pre-tax and post-tax scenarios to demonstrate how each impacts pay. 
• Incorporating gamification: Learning about benefits can be fun and engaging when you use elements like live polls and quizzes to test employees’ knowledge or provide small prizes or recognition points for employees who engage in workshop discussions. 
• Offering multiple workshop types: You might offer lunch and learn sessions, interactive webinars, or on-demand recordings for busy employees who can’t attend your live sessions. 

5. Encourage anonymous questions 

Not all employees feel comfortable asking questions about their personal benefits package in a public setting. Employers can overcome this roadblock by providing an anonymous Q&A option. For example, they might use online forms or suggestion boxes to give employees the information they need without any awkwardness. 

Benepass tip: If questions aren’t coming in thick and fast, create a list of common FAQs and answer them to proactively kickstart some discussion and engagement.

6. Incorporate employee benefits education into onboarding 

Your new employees have a lot to take in during their first few weeks, but that’s no excuse for sidelining information about their total compensation package. Introduce pre-tax benefits early and often so employees understand their options from day one. You might: 

• Include a “Benefits 101” session as part of their employee onboarding
• Send a personalized welcome email breaking down the key benefits you offer and how to access them 
• Provide a quick-start benefits guide with real-world savings examples
• Assign a benefits buddy, a willing current employee who can answer questions

7. Commit to regular benefits updates 

There’s no such thing as a set-it-and-forget-it approach to pre-tax benefits. The IRS tends to change contribution limits and other key regulations each year, so it’s essential that employers regularly update their employees about their benefits. Keep benefits top of mind by: 

• Offering quarterly benefits check-ins, for example, by email or in team meetings 
• Hosting mini refreshers during open enrollment season or after major qualifying life events like getting married or having a child 
• Including them as an agenda item in 1:1 meetings, so managers can signpost relevant resources and keep their employees engaged and informed 

6 pre-tax benefits terms your employees may be unfamiliar with

Employee benefits can feel like an entirely new language if you’re not used to the terminology. Here’s some key pre-tax benefits vocab you can offer your employees to help them understand your resources and the overall benefits landscape: 

Tax-advantaged benefits 

A tax-advantaged benefit reduces taxable income, offers tax-free growth, or allows tax-free withdrawals. Examples include 401(k)s, HSAs, and FSAs, helping employees save money now or in the future.

Traditional IRA

A traditional IRA allows individuals to contribute pre-tax income (up to $7,000 in 2025, or $8,000 if you’re aged 50+), reducing their taxable income. Taxes are paid later when withdrawing funds in retirement, often at a lower tax rate.

Roth IRA 

A Roth IRA is funded with after-tax dollars, meaning contributions don’t lower taxable income now, but all withdrawals, including investment growth, are 100% tax-free in retirement—a major advantage for future financial planning. Contribution limits are the same as traditional IRAs. 

Flexible spending account (FSA) 

An FSA allows employees to set aside pre-tax earnings (up to $3,300 in 2025, with the option for a spouse to contribute the same) for healthcare, dental, vision, or dependent care expenses. Funds typically expire annually unless the employer offers a rollover or grace period.

Health reimbursement arrangement (HRA)

An HRA is an employer-funded account that reimburses employees for qualified medical expenses. Employees cannot contribute their own money, but employer-funded reimbursements are tax-free. There are different types of HRAs, each offering unique flexibility:

• Individual Coverage HRA (ICHRA): Allows employees to use employer funds to buy their own health insurance. There is no contribution limit for ICHRAs. 
• Qualified Small Employer HRA (QSEHRA): Designed for small businesses to reimburse employees for health expenses, including individual insurance premiums. The contribution level for self-only coverage is $6,350, rising to $12,800 for family coverage in 2025. 
• Excepted Benefit HRA (EBHRA): Covers limited expenses like dental, vision, or short-term insurance, separate from major medical plans. The IRS limits contributions to a maximum of $2,150 in 2025. 

Health savings account (HSA)

An HSA is a pre-tax savings account for employees with a high-deductible health plan (HDHP). In 2025, contribution limits are $4,300 for individuals, $8,550 for families, plus an extra $1,000 for those 55+. Typically, funds roll over annually and grow tax-free.

Health savings accounts are often confused with two other ways to fund employee healthcare. Here’s how HSAs differ from HRAs and FSAs. 

• HSA vs. HRA: HSAs are employee-owned, meaning funds belong to the employee even if they leave the company. HRAs, on the other hand, are employer-owned and funded only by the employer.
• HSA vs. FSA: Unlike FSAs, HSAs don’t expire at year-end. Instead, funds roll over indefinitely, making them a powerful long-term savings tool. FSAs, in contrast, often have a "use it or lose it" rule unless the employer allows a limited carryover.

Learn more about why tax-advantaged benefits are a win-win

Tax-advantaged benefits help employees save, but they also offer real financial advantages for employers. When employees contribute pre-tax dollars to 401(k)s, HSAs, FSAs, or commuter benefits, it lowers their taxable income, reducing the amount of Social Security, Medicare, and other payroll taxes that employers are required to pay.

For employees, these benefits mean more money in their pockets — lower taxable income, higher take-home pay, and savings on essential expenses like healthcare and retirement.

At Benepass, we empower businesses and their people to maximize the value of every dollar they spend on benefits. Our pre-tax benefits offering includes: 

• Health reimbursement arrangements
• Health savings accounts 
• Flexible spending accounts 
• Commuter benefits 

We also offer a wide range of post-tax benefits, including lifestyle spending accounts, stipends, and more. 

Book a free Benepass demo to see our platform in action, or feel free to reach out to us at sales@getbenepass.com to build a satisfied workforce, knowledgeable about their benefits.