Fact Sheet: Health Savings Accounts: Affordable and Accessible Health Care
Today's Presidential Action

Today, President Bush Discussed His Agenda To Make Health Care More Affordable And Accessible By Expanding Health Savings Accounts (HSAs). The President discussed how HSAs are giving Americans more control over their health care costs and decisions and are helping businesses make health care more affordable and accessible for employees.

Health Savings Accounts: The Basics

What Are HSAs? Established by the Medicare reform bill President Bush signed into law in December 2003, HSAs allow Americans to save tax-free dollars to pay for near-term medical expenses and save for future longer-term costs. Accounts are accompanied by an HSA-qualified insurance plan covering major medical expenses and preventive care. HSA-qualified insurance plans are an alternative to traditional health insurance policies and have lower premiums and higher deductibles. Savings from lower premiums can be put toward funding the HSA.

• Who Is Eligible For HSAs? To be eligible for HSAs, individuals must be covered by an HSA-qualified insurance policy. Americans with government health benefits, for example Medicare and Medicaid, are generally ineligible.
  
  
• How Do People Sign Up For HSAs? People with HSA-qualified plans can open up their account with banks, credit unions, insurance companies, and other approved companies. Employers may also set up plans for employees. More information is available on the Treasury Department website at http://www.treas.gov/offices/public-affairs/hsa/faq.shtml.
  
  
• What Are HSA-Qualified Insurance Policies? HSA-qualified insurance policies are more affordable insurance plans that protect individuals and families in the event of major medical illness. These plans generally provide the same benefits as traditional insurance policies, including prescription drug coverage, doctor's visits, emergency room visits, and hospitalization. However, they require that a higher deductible be met before benefits are paid. The higher deductible allows the insurance company to charge significantly lower premiums.
  
  
• How Much Can Be Contributed To An HSA Annually? For 2006, Americans can contribute up to $2,700 per year for individual coverage or up to $5,450 per year for a family. However, annual contributions cannot exceed the deductible of the HSA-compatible insurance policy. For example, if the deductible is $1,100, not more than $1,100 can be contributed that year. Both individuals and employers can contribute to HSAs. Money unspent one year rolls over into the next year. Americans age 55 or older (and not yet enrolled in Medicare) can make additional "catch-up" contributions of up to $700 per person this year, which can provide extra help to many early retirees.

HSAs Provide Americans With More Control Over Health Care Costs. Americans own and control the money in their HSA. They decide how to spend the money in their account on their own health care needs, and they keep what they do not spend. HSAs can make health insurance more affordable and help businesses lower health care costs.

• Increased Patient Control Over Health Care Spending Can Result In Better Value For The Patient. For example, overall health care costs have risen, but competition and consumer choice have lowered the cost of laser eye surgery (LASIK) - a procedure not covered by most insurance plans. The consumer marketplace led the price of this surgery to fall by almost half, and procedures increased 10-fold from 1998 to 2002
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