Happy Birthday HSAs!

Health Savings Accounts (HSAs) celebrated their 20th birthday last week. HSAs were signed into law on December 8, 2003 by then President George W. Bush. Here are some fun facts about HSAs!

Did you know HSAs were authorized under a Medicare law?

HSAs were authorized under the Medicare Prescription Drug Improvement and Modernization Act. This is the law that created Medicare Part D plans. Many Republicans didn’t like Medicare Part D but agreed to move forward with the law if HSAs were authorized.

Did you know that prior to HSAs there were Medical Savings Accounts (MSAs)? MSAs worked similarly to HSAs in many ways, but MSAs could only be opened by self-employed individuals and employees of small
businesses. The ability to open new MSAs was discontinued in 2008.

Did you know a High Deductible Health Plan (HDHP) was originally defined as a plan with a $1,000 deductible ($2,000 for family plans) and a maximum out-of-pocket of $5,000 ($10,000 for family plans).

Did you know that approximately 35 million HSAs have been opened? When considering family members, it’s estimated that HSAs are covering more than 70 million Americans.

Did you know that the overwhelming majority of HSAs are owned by individuals that have $100,000 or less of household income? HSAs were once perceived as a benefit for the “healthy and wealthy” but they truly are helping working class Americans.

Did you know there is estimated to be more than $100 billion held in HSA assets? This is according to a Devenir HSA Research Report.

Did you know HSAs are being used as a retirement savings vehicle? HSA contributions are tax-fee, earnings and interest grow tax-free, and distributions for medical expenses are tax-free. HSA accountholders can reimburse themselves in retirement for medical expenses that were incurred while they were working. HSA funds can also be used tax-free for Medicare Part A, B, C, and D premium expenses. Take a look at this whitepaper.

Did you know that there are currently bipartisan efforts in Congress to expand and enhance HSAs? All sorts of changes are being considered. Anything from increasing contribution limits to expanding the types of plans that qualify as HDHPs are being considered. Refer to this blog for more details.

Happy Birthday HSAs!

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