John Boehner, October 29, 2004

Millions of U.S. workers share a very consistent financial concern: the rising costs for health care. This year, many have been introduced to a new resource in the health care industry: Health Savings Accounts (HSAs). These accounts debuted this year as a result of a measure passed by Congress late in 2003. As I’ve talked with members of the workforce throughout the Eighth District in recent months, I’ve found that many have not heard about HSAs or fully understand their benefits. With this in mind, I’d like to provide some background on these innovative resources, which I hope proves useful to you and your friends and family.

HSAs were crafted by Congress to give families across the nation a new way to save for their lifetime health care needs. To qualify, a person must be under the age of 65 and covered by a high-deductible health insurance policy: one with annual out-of-pocket costs of at least $1,000 for an individual or $2,000 for a family. The maximum annual contribution to an HSA can be as high as your deductible, up to $2,600 for individual policies and $5,150 for family policies. Contributions can be made by anyone: an individual, an employer, or a family member. And those between the ages of 55 and 64 will be able to make additional "catch-up" contributions ($500 this year, $600 next year, and $100 each year after that until 2009, when the amount caps at $1,000).

Withdrawals from HSAs can be used for medical expenses not covered by your insurance policy, including: insurance premiums, prescription drug costs, long-term care insurance, Medicare expenses, and even dental and orthodontic care.

What makes these accounts different from others out there? For starters, they are completely tax-free. That means contributions to them are tax-deductible, interest earned within each account is tax-free, and withdrawals are not taxed if they are used to pay for qualified medical expenses. While other tax-advantaged savings plans such as Roth IRAs and 401(k)s offer either a federal tax deduction for deposits or tax-free withdrawals, none offers both. HSAs do.

HSAs also stay with a person from job to job. As assets build in them, they are yours all the way into retirement. If you die, these assets can be transferred tax-free to a spouse, who also would be able to use the money for similar out-of-pocket medical expenses. Another perk of HSAs is that - unlike the "flexible savings accounts" that are currently offered by some employers - unused money in HSAs will not be forfeited at the end of the year. Instead, the money can be rolled over year to year, making them even more attractive to working families.

About 40 million Americans are eligible for HSAs, according to recent estimates. By 2013, projections indicate as many of 50 percent of those with health insurance will open an account. USA Today reports that one-third of this year’s HSA buyers were previously uninsured. That’s good news. And, almost half earn less than $50,000 a year. It’s no wonder why the paper noted in a recent editorial, "HSAs could ease the two biggest problems in health care: soaring costs and growing ranks of uninsured."

For those interested in Health Savings Accounts, my advice is to shop around. Many health insurance companies and even financial institutions have established funds available to both individuals and families. Many employers offer them for their employees as well. No matter what your financial or health insurance situation is like, I urge you to take a look at HSAs. They are a growing solution to many of our health care cost concerns, and they may be just what the doctor ordered for you.

Congressman John Boehner, a Republican, represents Ohio's Eighth Congressional District, which includes Miami, Butler, Preble, Darke, and Mercer Counties.