President Trump’s 2020 budget proposal calls for expanding tax advantaged Health Savings Accounts.
Most notably, the proposal will expand HSAs to millions of American families by integrating healthcare plans with an actuarial value of up to 70 percent with HSAs.
Since they were created in 2004, HSAs have become a popular and successful vehicle that promotes patient choice in health care. HSAs are used in conjunction with low premium, high deductible health insurance plans and provide a vehicle for individuals to spend and control their own money on their own health needs. Today, HSAs are used by over 25 million American families and individuals.
HSAs contribute to lower healthcare spending by promoting consumer driven healthcare. HSA funds are completely controlled by the individual and follow them between jobs creating an incentive to spend funds wisely.
Research shows that families and individuals that utilize HSAs spend less on health care and use fewer medical services without forgoing necessary primary and preventative care.
HSAs are a significant vehicle to pay for healthcare expenses. An HSA user can accumulate as much as $360,000 after contributing to an account for 40 years assuming a rate of return of just 2.5 percent, according to the Employee Benefit Research Institute. With a rate of return of 5 percent, an HSA user can accumulate $600,000 over 40 years.
HSAs also reduce taxes for American families. HSAs offer triple tax benefits to users – contributions made are tax free, interest and investment is earned tax free, and payments made to qualifying health expenses are tax free. Expanding HSAs will provide additional tax reduction for American families and will promote saving and investment.
By giving millions of American families access to HSAs, the Trump budget proposal will expand healthcare freedom and access for Americans across the country.