Op-Ed: Health Savings Act Provides a Way Forward for HSAs

In an op-ed in The Hill today, ABA’s Kevin McKechnie voiced his support for proposed legislation that would exempt employee contributions to HSAs from the Affordable Care Act’s excise (or “Cadillac”) tax. The tax imposes a 40 percent tax on high-cost employer-sponsored health plans.

McKechnie pointed out that HSAs differ from traditional employer-funded health plans in several ways—namely, that HSA owners have “skin in the game,” since they are spending their own money, and as a result, tend to make more cost-conscious health care choices. “Over time, HSA owners become better savers, achieve better health outcomes and come to the gates of Medicare with cash in their account, instead of empty handed like the subscribers to traditional health plans,” he wrote.

The Health Savings Account Act of 2016—proposed by Sen. Orrin Hatch (R-Utah), Sen. March Rubio (R-Fla.) and Rep. Erik Paulsen (R-Minn.)—includes provisions that would exempt HSAs from the tax, streamline the HSA administration process, and make HSAs more widely available to more Americans. It would also allow Medicare Part A beneficiaries to continue contributing to their HSA accounts after age 65.

“These provisions will collectively improve and expand the ability of Americans to use their Health Savings Accounts by promoting control, choice and personal responsibility in health insurance,” McKechnie added.