Q: "I have a health savings account, or HSA, through my financial institution, where I use money from the account to pay for health care services. In all the chaos over health care reform, I haven’t heard much about its impact on HSAs. Can you shed some light on this?" - T.R., Concord, N.H.
A. The health care reform bill, enacted last March, will chip away at the façade of the health savings account, no doubt about that.
For the uninitiated, an HSA enables health care consumers to use high deductible health plans to sock money away in a savings account, tax-free, to pay for health care costs. Like any savings account, an HSA accrues interest and can roll over from year to year.
It’s the best of both worlds for health consumers who aren’t blessed with one of those public or private “Cadillac” plans that give them gold-plated coverage for no or low cost. HSAs are also highly popular with small business owners and independent contractors, who can use their health savings accounts to pay for basic medical services, and also have insurance to cover any catastrophe that might befall them.
In one way, health savings accounts should grow along with health care reform. With more Americans mandated to buy health insurance, the option to buy low-premium, high-deductible plans should be attractive to consumers. According to HealthSavingsAccounts.com, HSAs have garnered $8.6 billion in deposits in the U.S., and the website estimates that the HSA market will grow to $100 billion.
About 20,000 American companies offer health savings accounts to their employees. General Electric (Stock Quote: GE), the largest corporation in America, only offers HSAs to its workforce of 75,000 – GE cancelled its traditional health care plans in 2009.
But how will health care reform directly impact health savings accounts? In several ways, actually.