Health Savings Accounts (HSAs) offer individuals and families the ability to save and pay for medical expenses with tax-free benefits in the form of contributions, interest-earned, and withdrawals for qualified expenses. Employers and individuals have increasingly been turning to HSAs; however, reforms are needed to ensure that these accounts remain a valuable tool for the foreseeable future.
- There is no active legislation on this issue.
Congress should pass legislation to promote flexibility, encourage innovation and expand access to HSAs by aligning HSA regulations with the most effective cost-containment strategies that will help consumers save money and stay healthy.
- There are no active Operation Shouts on this issue.
Health Savings Accounts are tax-advantaged personal savings accounts used in conjunction with a qualified high-deductible health plan (HDHPs) to help pay for unreimbursed medical expenses. HSAs were authorized under the Medicare Prescription Drug and Modernization Act of 2003. Contributions to HSAs may be received from employers, individuals or any combination of both. Employer contributions are excludable from income and individual contributions are deductible, regardless of whether or not a taxpayer itemizes deductions. Employers may also offer HSAs as part of a section 125(d) cafeteria plan. Annual contributions are limited to the maximum annual federally established deductible amount, but individuals 55 an older can make additional contributions. HSAs are portable and belong to the individual; funds carry over to subsequent years.
Legislation should seek to promote flexibility, encourage innovation and expand access to HSAs by aligning HSA regulations with the most effective cost-containment strategies that will help consumers save money and stay healthy.
- HSAs are an excellent way for individuals to save for future health expenses, for employers to offer lower-cost coverage to their employees, and to improve access to affordable coverage for the uninsured.
- Legislation is needed to modernize HSAs to how healthcare and wellness services are currently used and that were not in use at the time HSAs became effective in 2004.