Congress & Your Healthcare Savings Account


Politics is a funny business. Both the President and some of Washington’s other leading figures have bemoaned the spending culture and called for Americans to starts saving again. So why go after one of the consumer health care industry’s best ways to help consumers save money?

That seems to be the case with Health Savings Accounts. A Health Savings Account is a medical savings account set up by individuals and employers where the money contributed can go towards medical expenses. Any unused money in a given year rolls over to the next year. HSA funds are not subject to federal taxes at the time of deposit. In addition, funds contributed to an HSA grow tax free, and most withdrawals are tax free, provided they go to pay for qualified medical expenses.

But cutting back on health care savings accounts – an increasingly popular health care payment option for 3.2 million Americans, according to the U.S. Treasury (up from 438,000 in 2004), seems to be the sentiment in Washington as Congress and the White House tackle health care reform.

Never mind that, according to the Treasury Dept., 31% of Americans who have purchased health care savings accounts previously did not have insurance, or the fact that 33% of small businesses who purchased HSA’s for their employees previously did not offer health insurance.

The die seems already cast. The U.S. Senate version of the health care reform legislation has a provision in it that restrict the amount of money that HSA holders could contribute to their accounts. The Senate package also includes language that would increase government oversight on how the plans are structured and how the money in savings accounts is used to pay for health care needs.

One way that the Senate could slash health care savings account contributions is by tying contributions to health insurance plan deductibles, if that deductible is less than the $3,000 contribution limits for individuals and $5,950 limits for families. If, for example, an individual’s HSA deductible is $1,150, the Senate plan (admittedly a work in progress) could cap contribution limits to that amount thus, reducing both the savings and spending power of HAS plans.

Left untouched, Health Savings Accounts are estimated to cover 25 to 30 million people by 2010, according to U.S. Treasury estimates. Ironically, the White House version of the health care reform plan calls for increasing HSA’s to 40 to 45 million Americans in the same period.

What’s less clear is what HSA’s will look like if the Senate’s version of the health reform plan passes Congress.

But with American’s looking for creative ways to save money and pay onerous medical bills, HSA’s would seem to have a bright future.

Unless, that is, Washington politicians intervene and change the prescription.

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