As Tax Day approaches, Americans are looking for every legal way to keep more of what they earn. Healthcare is the expense most likely to derail any budget.
Congress doesn't restrict IRA or 401(k) eligibility based on where you work. It doesn't limit 529 education accounts based on where your children attend school. Yet federal law limits who can contribute to Health Savings Accounts (HSAs), leaving more than 140 million Americans without access to a proven tool for managing healthcare costs.
That exclusion has real consequences. Americans now spend more than $5 trillion annually on healthcare—nearly 18% of GDP—while healthcare costs continue to rise faster than wages. For many families, an unexpected medical expense means tapping retirement savings or taking on high-interest debt, undermining long-term financial security to meet immediate healthcare needs.
There is a better approach. HSAs offer a rare triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are untaxed. The accounts belong to the individual, roll over year to year, and remain portable across jobs and life changes. They function like a 401(k) for healthcare, but unlike retirement accounts, the funds are accessible tax free and without penalty whenever qualified medical expenses arise.
The evidence supporting HSAs is clear. As the nation’s largest HSA administrator, we see firsthand what survey data proves: HSA account holders are more cost-conscious, more likely to ask about pricing, and more inclined to comparison-shop than traditional insurance enrollees.
Today, more than 40 million American individuals and families hold HSAs, with combined assets exceeding $150 billion. This represents real savings and genuine engagement with healthcare spending.
Despite this track record, an outdated law prevents HSAs from reaching their full potential. Eligibility remains tied to enrollment in a “high-deductible health plan”, a framework created more than two decades ago based on assumptions that no longer reflect how Americans work, earn income, or access care.
Recent policy discussions suggest growing recognition that healthcare dollars should flow directly to consumers. That principle aligns with the core logic of HSAs: individuals making informed, cost-conscious decisions with their own resources.
Public support for expanding access is broad and bipartisan. Polling from the Great American Health Alliance shows that 73% of Americans favor personal healthcare accounts, with strong majorities across political parties. When asked about specific features, Americans consistently prioritize transparency, portability, tax-free growth, and preventive care funding, the very things HSAs already provide.
Reform does not require reinventing the healthcare system. It requires three practical steps: decouple HSA eligibility from insurance plan type, extend access universally, and expand qualified expenses to include premiums and more preventive care. Together, these changes would transform HSAs from a niche benefit into a broadly available tool for managing healthcare costs.
Some critics point to lost tax revenue. But the status quo is already expensive. Healthcare spending continues to rise 3 times faster than wages, driving higher premiums, increased subsidies, and greater reliance on public programs. By encouraging consumer engagement and price sensitivity, HSAs address cost growth at its source, at far lower long-term cost than direct subsidies or new entitlement programs.
With bipartisan public support and a clear market rationale, Congress should act now to remove the outdated barriers that prevent most Americans from accessing this proven financial tool. The question isn't whether HSAs work. The question is: why limit access to a solution that strengthens household finances and improves overall health?
Healthcare reform doesn't require another massive government program. Sometimes, the most effective policy is expanding tools that already work and removing barriers that no longer serve American families. As people itemize their spending lives in preparation for Tax Day, now would be a good time for policymakers to lift arbitrary restrictions and modernize healthcare’s cost structure for today’s Americans.
