Health Savings Accounts: Participation Increased and Was More Common among Individuals with Higher Incomes

With health care spending increasing in the United States, you enacted legislation effective in 2004 establishing tax advantaged health savings accounts (HSA) to be coupled with high-deductible health insurance plans. HSA-eligible high-deductible health plans typically have lower premiums than traditional health plans and HSAs allow account holders to accumulate tax-free savings to pay for medical expenses. The novel structure of HSA-eligible plans coupled with HSAs has raised questions about who selects them and how they use the accounts. Proponents contend that the low premiums of HSA-eligible plans and the tax-free savings potential of HSAs appeal to many consumers, while the high deductibles encourage them to be more astute health care consumers. However, some critics are concerned that HSA-eligible plans may attract enrollees who seek lower premiums but lack the resources to contribute to an HSA, and wealthy enrollees who may seek to use the HSA primarily to accumulate tax-advantaged savings rather than pay for medical expenses. In a 2006 report, GAO described individuals' early experiences with HSA-eligible plans and HSAs and certain characteristics of HSA account holders. You asked us to update certain information from that report with more recently available data. For this report, GAO examined: (1) participation in HSA-eligible high-deductible health plans and HSAs, (2) the income characteristics of HSA account holders, and (3) contributions made to and withdrawals made from HSAs.