Issues for Debate
Impact of HSAs on Health Care and Federal Spending
Health savings accounts (HSAs) are a new way that people can pay for medical expenses not covered by insurance or other reimbursements. Eligible individuals can establish and fund these accounts when they have a qualifying high-deductible health plan and no other health insurance, with some exceptions. The accounts have tax advantages that can be significant: Contributions are deductible, withdrawals used for medical expenses are not taxed, and account earnings are tax-exempt. Unused balances may accumulate without limit. Three other tax-advantaged accounts to pay for unreimbursed health care have existed for some time: Archer medical savings accounts (MSAs) and two employer-offered…
