February 8, 2017


HSAs: Big tax break or gimmick to benefit the wealthy? (Julie Appleby, Kaiser Health News , 2/07/17,  @CNNMoney)

They are just three little words -- health savings accounts -- but they are generating a lot of buzz as Republicans contemplate plans to repeal and replace the Affordable Care Act.

Based on a long-held conservative view that consumers should be more responsible for their health care spending, expanding the use of HSAs is part of almost every GOP replacement plan under consideration on Capitol Hill.

Here's the theory behind HSAs: Making consumers bear a bigger upfront share of medical care -- while making it easier to save money tax-free for those costs -- will result in more judicious use of the health system that could ultimately slow rising costs.

While the details of the current proposals differ, they all generally seek to allow larger tax-free contributions to the accounts and greater flexibility on the types of medical services for which those funds can be used. Some include tax credit subsidies to help fund the accounts.

Supporters say premiums for the insurance linked to an HSA are lower, and they like HSAs' trifecta of tax savings -- no taxes on contributions, the growth of the funds in the account or on their withdrawal if spent on medical care. But skeptics note the tax break benefits wealthy people more than those with lower incomes.

Still, expect to hear a lot more about HSAs in the coming months. Here's what you need to know...

Posted by at February 8, 2017 7:12 AM