HSA Growth Linked to Key Part of Future Health Law

Gregory A. Freeman, August 16, 2017

More employers offer health savings accounts as part of their benefit packages, aiming to lower costs for themselves and employees alike. Changes that make the accounts more consumer-friendly are likely to be part of any future healthcare reform.

Health savings accounts (HSAs) are gaining in popularity and could play a major role in any upcoming healthcare reform efforts, one analyst says, as some consumers demand more control over how they spend their own money on healthcare needs, and as employers urge the rest to get more involved.

Some employers offer HSAs as part of a health benefits package. They are similar to personal savings accounts, but the funds are deposited into the account on a pre-tax basis, so employees reduce their tax liability, and they can only be used for qualifying medical expenses.

The number of HSA accounts rose to 20 million in 2016, according to a year-end report, with almost $37 billion in assets. That is a year-over-year increase of 20% for the number of accounts and 22% for HSA assets for the period of December 31, 2015, to December 31, 2016.

The Affordable Care Act changed how consumers could use HSAs and the recent bills in the Senate tried to reverse some of those rules to give consumers more freedom with those funds, notes Brandon Wood, president of client experience with Maestro Health, a company providing support for employee health benefits to employers.

The most recent Senate bill expanded the amount of money people could set aside in HSAs and rolled back some restrictions imposed by the ACA.

Though that bill didn't pass the Senate, Wood says HSAs are increasingly popular with employers and any ongoing effort to reform the ACA is likely to include similar provisions.

"The Senate Republicans tried to restore some of the facets of HSAs that are most popular with Americans. The most significant was how the ACA disallowed the use of HSAs to pay for over-the-counter medications, stuff like allergy treatments," Wood explains.

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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