White House Gives Details of Bush HSA Proposals

February 1, 2006 (PLANSPONSOR.com) - The White House is providing more details on plans to expand health savings accounts (HSAs) President Bush alluded to in his Tuesday State of the Union address.

HR.BLR.com reports that Bush is proposing an expansion of HSAs by:

  • making premiums for HSA-compatible insurance policies deductible from income taxes when purchased by individuals outside of work.
  • allowing Americans with HSAs and their employers to make annual contributions to their accounts to cover all out-of-pocket costs under their HSA policy, not just their deductible as provided under current law.
  • providing a credit for payroll taxes paid on HSA contributions made by individuals.
  • giving employers the ability to offer workers a Portable HSA insurance policy that the employees would be able to take wherever they go.

Critics say HSAs benefit the healthy and wealthy and leave others with a weaker health care system. HR.BLR.com reports that California Insurance Commissioner John Garamendi asserted: “I fear these are little more than investment vehicles for the rich and healthy. Targeting this program to the most vulnerable in society can only end with a weakened healthcare model.”

One trade group backed the White House move in a statement Wednesday. “By making a few sensible improvements in HSAs, we can help make individuals more prudent health care consumers and make health coverage more affordable for millions of Americans,” said James Klein, president of the American Benefits Council, in the statement.