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What is a Health Savings Account?<\/p>\n
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A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year to year if not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds paired with either HDHPs or standard health plans. HSA funds may currently be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Beginning in early 2011 OTC (over the counter) medications cannot be paid with HSA dollars without a doctor\u2019s prescription. Withdrawals for non-medical expenses are treated very similarly to those in an individual retirement account (IRA) in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer-driven health care.<\/p>\n
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Promoters of HSAs<\/strong> Arguments of HSAs<\/strong> Increased use of HSAs<\/strong> [\/et_pb_text][et_pb_text _builder_version=”4.5.3″ _module_preset=”default”]
Proponents of HSAs believe that they are an important reform that will help reduce the growth of health care costs and increase the efficiency of the health care system. According to proponents, HSAs encourage saving for future health care expenses, allow the patient to receive needed care without a gatekeeper to determine what benefits are allowed, and make consumers more responsible for their own health care choices through the required High-Deductible Health Plan.<\/p>\n
Opponents of HSAs say they may worsen, rather than improve, the U.S. health system\u2019s problems because people may hold back the healthcare spending that would be covered by their Health Savings Accounts, or may spend it unnecessarily just because it has accumulated and to avoid the penalty taxes for withdrawing it, while people who have health problems that have predictable annual costs will avoid HSAs in order to have those costs paid by insurance. There is also debate about consumer satisfaction with these plans.<\/p>\n
Data released in 2012 indicate that the use of HSAs is increasing. AHIP reported in May 2012 that the number of people covered by an HSA-eligible HDHP more than doubled between January 2008 to January 2012 (going from 6.1 million to 13.5 million). The split between group and individual plans was 11 million vs. 2.5 million, and the gender distribution of HSAs between male and female enrollees was an even 50%. Among individual plan holders, 51% were under age 40 and 49% were age 40 or over. The top five states with HSA\/HDHP enrollment were California (1 million), Texas (0.76 million), Illinois (0.72 million), Ohio (0.66 million), and Florida (0.54 million). Also, a survey released in February 2012 by J. P. Morgan Chase of the 900,000 HSAs that it manages indicates that contributions to HSAs have been steadily increasing. Between 2009 and 2011, the average Chase HSA balance rose by 11% annually, and the average employee contributions increased by 7% in 2011. Also, in 2011, 42% more dollars were transferred from HSA cash into HSA investment accounts than were transferred out.
According to 2015 midyear research conducted by Devenir, an estimated $28.4 billion is held in HSA accounts amongst 14.5 million HSA accounts<\/p>\n