Update on Health Savings Accounts

March 10, 2014

The current version of health savings accounts (HSA) began in 2003, so we now have 10 years of experience with them. The Devenir Group recently published an update on HSA utilization through the end of 2013. The popularity of these plans continues to grow in spite of the limitations placed on them by the Affordable Care Act (ACA), also known as Obamacare.

Last year, the number of accounts grew by 30% to 10.7 million and assets in the account grew by 25% to $19.3 billion. Employers make up 38% of the new accounts last year. The number of employers who only offer an HSA plan grew from 9% in 2012 to 12% in 2013.

The money in an HSA grows in a tax-free savings account and can be used for day-to-day medical expenses. To be effective, an HSA must be coupled with a high deductible health insurance plan (HDHI) to cover large medical expenses. An HSA allows people, as consumers of health care, to control their own health care expenditures.

The cost of health care in the United States is still rising faster than the cost of living, but has slowed in the past 10 years - long before the passage of the ACA. One of the reasons for this slowing trend is the increase use of HSAs and their effect on consumerism in health care purchases. People have more control over their health care dollars and spend them in a much wiser fashion.

At least for now, it appears that an HSA coupled with a Bronze Plan in the ACA will still satisfy the benefit mandates in Obamacare. (Here) On the other hand, a Bronze Plan is not a true HDHI plan. We have already seen many Administrative changes to Obamacare and tragically, the long-term outlook for HSAs remains tenuous.

Comments

Save our HSAs

Thank you for that blog post.

My family has made good use of HSAs over the last several years. We found it bizarre and nonsensical that Occupy Wall Streeters were calling them a luxury of the rich. (At the time of their protests we were a one-income, one-car family crammed into a small leased condo.)

Obamacare prohibited us from using our HSA to pay for certain medical-related expenses as we previously did. What's wrong with leaving us free to keep our costs low and pay for only the services we really need? It seems Obamacarecrats just want even greater control over our lives and to make us dependent on them.

Given the seemingly lawless way Obamacare is now being implemented, I'm worried the rug is about to be pulled from under all HSAs.